The Lopez Group majority has raised fresh allegations of a second “poison pill” provision in transactions between First Gen Corp. and Prime Infrastructure, adding to an ongoing dispute over the structure and terms of asset deals involving the group’s gas and hydropower businesses.

In a statement issued through its legal counsel on April 20, the majority said the provisions would be triggered if Federico “Piki” Lopez is removed as chairman and chief executive officer, effectively allowing Prime Infrastructure to take full ownership of both businesses under discounted terms.

“There are two, not one as earlier discovered, poison pills that would allow Prime Infrastructure to buy out First Gen from its gas and hydropower businesses at a 25% discount, or a loss of about PHP 24 billion,” the group said.

The claim follows earlier disclosures of a separate clause linked to Prime Infra’s hydropower partnership with First Gen, which was previously described as a “key man” or change of management control provision

The Lopez majority also raised concerns over disclosure, saying the provisions were only reported to the Philippine Stock Exchange months after the fact and only after being exposed internally.

The statement said the provision ties the application of the clause to the retention of Piki Lopez in his leadership roles, while potentially resulting in more favorable terms for Prime Infrastructure if triggered, and raised concerns over its implications for First Gen’s minority shareholders.

According to the group, the provisions would penalize First Gen in two ways if triggered. First, Prime Infrastructure would be allowed to acquire First Gen’s remaining stake in its hydropower business at a 25% discount. First Gen had earlier acquired a 40% stake in Prime’s hydropower unit for PHP 75 billion, later reduced to 33% or about PHP 62 billion. The discount could translate to an estimated PHP 16 billion loss for First Gen, while giving Prime full ownership of the asset.

Second, Prime would also be able to purchase First Gen’s remaining 40% stake in its gas business—following its earlier acquisition of a 60% stake—again at a 25% discount. This could result in an additional PHP 8 billion loss, based on the majority’s estimates.

The Lopez majority described the provisions as “egregious self-dealing provisions,” questioning whether these were approved by the board and its independent directors, and whether shareholders were properly informed.

“The shareholders were never consulted on such a material transaction,” the group said, adding it is seeking clarification on governance and disclosure processes.

The statement comes amid an ongoing leadership dispute within the Lopez group. The majority said Lopez was removed as president and CEO of Lopez, Inc. in February through a 5-2 board vote citing cause and loss of trust. However, they noted that a court order has since blocked his removal.

What are the governance and regulatory implications of such “poison pill” provisions in critical energy assets? Join the discussion.

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