The controlling faction of the Lopez family is calling for a formal government inquiry into “poison pill” provisions at First Gen Corp., alleging the measures protect the tenure of President and Chief Executive Officer Federico R. Lopez, at the expense of state pension funds and international investors.

In a statement on Wednesday, April 29, the majority group warned that the Social Security System (SSS) and the Government Service Insurance System (GSIS) face billions of pesos in potential losses should the defensive triggers be activated.

The group identified global investment firm KKR & Co. as the largest potential casualty, noting its ₱12 billion stake held through HSBC. Based on Tuesday’s closing price of ₱16.86 per share, SSS and GSIS hold positions valued at more than ₱1 billion and nearly ₱1 billion, respectively.

“The huge loss would reduce the capacity of SSS and GSIS to assist their private- and government-sector members and to pay for their retirement benefits, including monthly pensions,” the group said.

The controversy centers on clauses that would purportedly allow Prime Infrastructure Capital to acquire First Gen’s natural gas and hydropower assets for ₱125 billion—a 25 percent discount to fair value—if Lopez or other key executives are removed.

The Lopez majority described the arrangement as a “scandal,” questioning why a single executive’s employment is tied to billions of pesos in shareholder value.

The group alleged that First Gen failed to disclose these provisions in a timely manner, claiming the “pills” were only revealed two and six months late following internal pressure. They are now urging regulators to determine if these agreements existed at the time of the original investments or were inserted as “afterthoughts” to entrench current management.

Beyond the pension funds, the statement noted that foreign investors using custodians such as Standard Chartered and Deutsche Bank are likely to challenge the measures.

The group argued that such provisions undermine fundamental shareholder rights and violate high standards of corporate governance regarding the board’s authority to replace management.

The internal rift has also extended to specific transaction approvals.

A member of the First Gen board has reportedly challenged the validity of a hydropower deal with Prime Infrastructure. The majority claims the original ₱75 billion transaction for a 40 percent stake was buried under “other matters” during a board meeting and discussed for only one hour in executive session.

Furthermore, the family faction questioned why First Gen subsequently reduced its stake in the hydropower business from 40 percent to 33 percent.

The group suggested the dilution may have been an attempt to bypass Philippine Competition Commission scrutiny.

By settling at 33 percent, the group alleged that Lopez surrendered minority veto rights, as a 33.33 percent stake plus one share is the legal minimum required to exert such power. (James A. Loyola)