Daily Tribune
THE majority faction of the Lopez family, which includes Eugenio ‘Gabby’ Lopez III, has ended the nearly month-long ceasefire with a new statement released Tuesday, 9 June questioning First Gen Corp.'s recent hydropower deal.
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First Gen Corporation (FGen) has responded to fresh allegations raised by the majority faction of the Lopez family regarding its recent P75-billion hydropower deal.
In a Wednesday afternoon disclosure to the local bourse, the Federico “Piki” Lopez-led energy company said the alleged P50-billion transaction premium paid as part of the acquisition was not “free” or “superfluous” money, but consideration for the deal partner’s years of investments and development work that brought the projects to a de-risked stage.
“Note that the premium paid is a standard consideration in M&A transactions, and one that is incorporated in the acquisition cost,” FGen said.
“At that point, the projects have successfully passed the development phases of highest risk and entered a relatively stable implementation stage, with construction risk largely remaining.”
FGen also denied allegations from the Lopez majority bloc that the premium had not been disclosed to the stock exchange.
In a statement issued Tuesday, the majority faction claimed that Piki Lopez subsequently reduced First Gen’s stake in the project from 40 percent to 33 percent, lowering the company’s investment from P75 billion to P61.875 billion to the detriment of shareholders. Under the arrangement, the faction alleged, the deal partner would retain 67 percent of the profits while contributing only P625 million.
FGen rejected the claim, saying the decision to reduce its stake was made for strategic and capital allocation reasons.
“The reduction in stake from 40 percent to 33 percent was carried out by First Gen strategically and prudently, taking into account its other future projects and projected capital allocation,” the company said.
“Since First Gen has a significant number of high-potential assets in the pipeline, management thought it best to scale back the hydro investment to ensure that First Gen would have the liquidity to fund all its projects,” it added, noting that these considerations outweighed any additional rights associated with a 40-percent shareholding.
The majority faction, which claims to represent 71 percent of the shares of Lopez Inc., also alleged that Piki Lopez personally financed the hydropower acquisition. FGen dismissed the assertion as “erroneous, malicious, and show[ing] an utter lack of understanding of basic M&A transactions.”
