The controlling shareholders of Lopez Inc. on Wednesday escalated their criticism of controversial “poison pill” provisions tied to transactions between First Gen Corp. and Prime Infrastructure Capital Inc., warning that major institutional investors, including state pension funds, could face significant losses if the clauses are triggered.
Shareholders who own 71 percent of Lopez Inc. said in a statement that the Social Security System and the Government Service Insurance System stand to lose billions of pesos from their holdings in First Gen. The provisions, they said, effectively penalize shareholders if key executives, including Federico “Piki” Lopez, are removed from management.
The controlling shareholders have ousted Piki as president of Lopez Inc., but he secured court order that stopped his removal as chief executive of the company.
The group added that the potential impact extends to flobal investment firm KKR & Co. Inc., whose shares are held through The Hongkong and Shanghai Banking Corporation Limited, could also face substantial exposure, alongside other foreign investors holding positions via custodians such as Standard Chartered and Deutsche Bank.
At the core of the dispute are provisions that would allow Prime Infrastructure to acquire First Gen’s gas and hydropower assets at a 25 percent discount if current management is replaced. The Lopez majority argued that such terms disproportionately protect management while offering no corresponding safeguards for shareholders.
“Why would one person’s job be worth billions of pesos of other people’s money?” the group said, calling the arrangement a “scandal” and urging a government investigation.
The shareholders also questioned disclosure practices, noting that the provisions were reportedly disclosed months after the transactions were announced. They said regulators should examine whether the clauses were part of the original agreements or introduced later.
Governance concerns extend to board processes. The Lopez majority cited internal objections over the approval of a hydropower deal, alleging it was briefly discussed under “other matters” before being cleared in an executive session.
They also raised questions over First Gen’s decision to reduce its stake in Prime’s hydropower business from 40 percent to 33 percent, suggesting the move may have implications for regulatory review and shareholder rights.
The dispute underscores broader concerns over transparency, board accountability, and investor protection, particularly as foreign and institutional investors typically adhere to stricter corporate governance standards.
