The majority owners of the Lopez family are stepping up their opposition against First Gen Corp.’s leadership, alleging that the power producer is bearing the entire financial burden of the multi-billion-peso renewable energy deal while securing only a minority position.

In a statement on Friday, June 19, the family majority publicly challenged First Gen Chairman Federico “Piki” Lopez and the company’s board to justify an agreement to pay ₱42 billion for a 33 percent stake in Prime Infrastructure Capital’s pumped-storage hydropower projects.

According to the dissident family members, the transaction essentially reimburses Prime Infrastructure for all its initial development costs, effectively handing the company a “free ride” on the back of First Gen's balance sheet.

Even after First Gen scaled back its planned acquisition from an initial 40 percent down to 33 oercent, the family majority claims the structural imbalances remain severe. Under the current terms of the ₱62-billion project, the family alleged that Prime Infrastructure is required to inject a net amount of only about ₱625 million—representing just one percent of the total cost—while retaining a 67 percent share of future profits. Meanwhile, they contend that First Gen is assuming nearly all of the operational and financial risks.

The family majority described the ₱42-billion valuation as an unjustified 200 percent premium, claiming the decision was rushed through an executive session lasting just one hour. They further alleged that the item was deliberately obscured on the board agenda under “other matters,” leaving board members without advance information or adequate time to analyze the transaction's complexities.

The dispute has also put a spotlight on corporate governance at the listed utility. The family group questioned whether board members were fully aware of specific change-of-management provisions, which they termed “poison pills” that could penalize First Gen by at least ₱24 billion if Piki Lopez is removed from his executive role.

First Gen’s independent directors—Manuel Ayala, Alicia Rita Morales, and Edgar Chua—have defended the transaction. In a joint statement earlier this week, the three directors stated that they fully exercised their fiduciary duties through objective and independent judgment.

They noted that their thorough review process concluded the investment would generate long-term value for First Gen and its public shareholders.

The independent directors also brushed aside criticisms of the transaction’s valuation, pointing out that annual earnings from First Gen’s 33 percent stake are projected to reach approximately ₱16 billion once the hydropower plants are fully operational.

They argued that because Prime Infrastructure has already achieved major development milestones, early-stage project risks have dropped significantly. Consequently, they described the premium as a standard consideration in major mergers and acquisitions.

They also dismissed the “poison pill” characterization, describing the management control clauses as routine features in large-scale infrastructure contracts.

The Lopez family majority rejected those explanations, countering that no single executive's job security should expose a publicly traded corporation and its thousands of minority institutional investors to billions of pesos in potential default liabilities.

They also warned of unhedged exposure to escalating construction costs and transmission charges, noting that First Gen lacks the protection of a negotiated price adjustment mechanism typically seen in large-scale energy investments. (James A. Loyola)