BDO backs First Gen deal, Piki Lopez leadership

Sy-led BDO Unibank has extended a total of P24.75 billion in standby letters of credit (SBLCs) to support First Gen Corporation’s strategic investment in renewable energy, while also backing the leadership of Federico R. Lopez, according to the Lopez group-backed energy firm.

In a Friday disclosure to the stock exchange, First Gen said the bank issued P9.9 billion and P14.85 billion in SBLCs to support its acquisition of a 33-percent stake in a major local hydropower player, which has recently come under scrutiny amid the ongoing Lopez family feud.

The investment, made through FGEN Aqua Power Holdings Inc., gives First Gen exposure to two major projects currently under development—the 600-megawatt Wawa and 1,400-MW Pakil pumped storage hydro facilities, both seen as critical to supporting the country’s renewable energy transition.

The SBLCs, a form of bank guarantee, ensure that financial obligations tied to the acquisition are met, reflecting lender confidence in both the project and the company’s long-term strategy. These also act as a safety net for First Gen, with the bank providing financial support should the deal encounter issues—a common practice in large, multibillion-peso transactions, according to legal experts.

However, First Gen noted that the bank’s support comes with conditions tied to leadership continuity within the First Philippine Holdings Corporation (FPH) group—particularly the continued involvement of First Gen chairman and CEO Federico R. Lopez.

“BDO’s issuance of the SBLCs in support of First Gen’s acquisition of a 33% stake in the pumped storage hydro projects, coupled with contractual arrangements on the change in management control, demonstrates the bank’s recognition that the continued active involvement of FRL in the FPH group is necessary, vital, and indispensable,” the statement read.

“Such a structure not only ensures that the FPH group maintains a unified strategic direction under FRL, but also underscores the link between the group’s financial footing and its leadership,” it added.

First Gen said that under the agreement, a change in management control—including Lopez stepping down from key roles or losing influence over board composition and ownership—would be considered an event of default under existing loan arrangements.

The statement also noted that the SBLCs would be triggered if Federico “Piki” Lopez or his family cease to own 29.17 percent of Lopez Inc., the ultimate parent company of the group, from which he was reportedly ousted as head on February 27.

Internal family disputes, reportedly involving broadcast giant ABS-CBN Corporation, led to Lopez’s ouster, which he later blocked after obtaining a court order. Statements from a faction representing a 71-percent majority of Lopez Inc. shareholders have since raised questions over First Gen’s recent deals and Lopez’s leadership.

Earlier this week, the majority faction flagged a supposed “poison pill” in First Gen’s deal with the hydropower firm, which could reportedly trigger a P16-billion penalty if Lopez or his associates are removed.

Corporate legal experts said such provisions are common in large, multibillion-peso energy transactions, with BDO’s commitment underscoring its confidence in Lopez’s leadership while also limiting the bank’s exposure to the investment.