First Gen exposure to two major projects
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.
Conditions tied to leadership continuity within FPH
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 percent 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 (Federico R. Lopez) 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.
Change in management considered an event of default
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 27 February.
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.
‘Poison pill’
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.
