First Gen Corp., the power generation arm of the Lopez Group, said its definitive agreements with Prime Infrastructure Capital, Inc. (Prime Infra) include change-of-management control provisions that could trigger discounted asset sales, worth a total P23.5 billion, if leadership conditions are not met during a defined period.
Under the terms, if a change in management control occurs during the construction of the Wawa and Pakil hydro projects and up to one year after their commercial operations dates, Prime Infra may compel First Gen to sell its shares in Prime Hydropower Energy Inc. (PHEI) at a 25 percent discount. The potential discount is approximately P15.5 billion based on the hydro projects’ purchase price.
The provision also extends to First Gen’s gas assets. Should Prime Infra exercise the option, it may require the company to sell its remaining shares in its gas plants at the same 25 percent discount, valued at approximately P8 billion.
First Gen outlined several scenarios that would constitute a change in management control, largely tied to the role and influence of Federico R. Lopez. These include his removal as chief executive officer, loss of board or executive committee control by his designees, or diminished voting and board representation in key entities, including PHEI and First Philippine Holdings Corp. A “designee” refers to an individual formally confirmed by Lopez to hold specified leadership roles.
The company said the provisions were requested by Prime Infra and underscore the investor’s confidence in Lopez and his management team.
The provisions complicate the ongoing leadership squabble in Lopez Inc., the privately held investment holding company of the group, where Lopez has been removed by his cousins as president and chief executive officer. The group, led by Eugenio “Gabby” Lopez III, holds 71 percent of Lopez Inc. and has 5 of the 7 board seats.
Separately, First Gen reported progress on the sale of a 33 percent stake in PHEI, noting that parties have executed agreements covering the assignment and subscription of shares in PHEI and related entities for the Pakil and Wawa projects.
The company added that operations remain unchanged, with business continuing as usual and no disruptions reported.
