First Gen Corporation’s recent P62-billion hydropower deal allegedly contains a “poison pill” that would penalize the Lopez Group by P16 billion if Federico “Piki” Lopez or his associates are removed from the company, according to a statement from majority shareholders of Lopez Inc.

In a Monday, 13 April statement, the majority said details of the alleged P16-billion provision were not disclosed to other shareholders or to the local bourse.

Self-dealing

“This is self-dealing at the expense of all First Gen shareholders and for the exclusive benefit of Piki and his cohorts. We only learned about it and the whole transaction when it was presented at a board meeting that concealed the investment under ‘other matters’ and [was discussed in an executive session for only one hour,” the Lopez majority said.

The majority faction, representing a 71-percent stake in Lopez Inc., had earlier sought clarity on a P61.875-billion transaction involving the sale of a majority of First Gen’s gas assets alongside the acquisition of a 40-percent minority stake in a major hydropower business, which was later reduced to 33 percent.

On Monday, the majority alleged that if Piki Lopez — who currently serves as President and CEO of First Gen — and his associates are removed, the counterparty may have the option to buy out First Gen’s 33-percent equity in its hydropower business at a 25-percent discount — equivalent to more than P16 billion off the P62-billion investment.

“What we know is that if Piki and the present First Gen management are removed, [the company] will have the option to buy out First Gen’s 33 percent equity in [its] hydropower business at a 25 percent discount, or more than a P16 billion off the P62-billion investment,” the majority added.

Legitimacy of transactions defended

First Gen previously defended the legitimacy of its recent transactions, noting these were approved only “after conducting transparent and rigorous evaluations, and only upon thorough review and approval by its Board of Directors.”

However, the majority said the decisions to invest and later reduce the stake were never presented to majority shareholders for approval until the board meeting —where the matter was discussed in just an hour.

“We do not know why he didn’t just go down to 33 percent plus one share to keep his veto power, and whether [the buyer] paid a premium for being handed full control. We are blind to everything,” the statement containing the majority’s concerns added.

Internal disagreements

The Lopez family feud reportedly stems from internal disagreements over Piki Lopez’s alleged refusal to fund broadcast giant ABS-CBN. The majority faction claimed that the dispute led to Piki Lopez’s ouster as head of Lopez Inc. — the private family-owned holding entity that serves as the ultimate parent company of the Lopez business group — in a 27 February, 5–2 board vote “for cause, and loss of trust and confidence as allowed by its by-laws,” which he later blocked by securing a court order.