Government pension funds Social Security System (SSS) and Government Service Insurance System (GSIS) could face multi-billion-peso exposure in First Gen Corp. if so-called “poison pill” provisions are triggered, according to the Lopez majority, which is calling for a government investigation into what it described as a governance “scandal.”

In a statement issued through its legal counsel, the Lopez majority said the provisions could allow Prime to acquire First Gen’s gas and hydropower assets at a discounted valuation if certain management changes occur.

“The two most important government pension funds — the Social Security System and the Government Service Insurance System — stand to lose billions of pesos in investments in First Gen if the two poison pills that protect Federico ‘Piki’ Lopez at the expense of the company and its shareholders are triggered,” the group said.

It added that the potential largest exposure may sit with global investment firm KKR, whose shares are held through HSBC, while SSS reportedly holds over PHP 1 billion in exposure and GSIS nearly PHP 1 billion based on the April 28 closing price of PHP 16.86 per share.

The group warned the financial implications could extend to pension sustainability.

“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 statement said.

At the center of the dispute are provisions described as “poison pills,” which the Lopez majority said operate in a way that enables a discounted buyout of First Gen’s gas and hydropower assets valued at around PHP 125 billion if certain leadership changes occur.

“Why would one person’s job be worth billions of pesos of other people’s money? This is a scandal, and the government should investigate, especially now that First Gen has been found to have disclosed the two pills two and six months late, and only because the majority exposed them,” the statement added, as attributed to its legal counsel.

The group also raised concerns over alleged disclosure delays and transparency gaps, claiming First Gen has not released full copies of investment agreements to determine whether the provisions existed at the time of disclosure or were added later.

It further argued that the arrangements may affect shareholder governance rights, particularly the ability to replace management.

“More than disclosure missteps, it removes the right of the board and shareholders to replace management, a fundamental right of all shareholders, especially for listed companies,” the statement said.

The Lopez majority also flagged issues surrounding a hydropower transaction, noting that a board member had questioned the validity of approval procedures, including claims that a major deal was discussed in executive session for only about an hour and initially structured as a 40% stake before being reduced to 33%.

It questioned whether the stake reduction was intended to avoid regulatory scrutiny, including clearance from the Philippine Competition Commission.

The statement also said foreign institutional investors routed through custodians such as Standard Chartered and Deutsche Bank may scrutinize the governance structure, citing adherence to international standards on transparency and shareholder protection.

Atty. Juman Paa, legal counsel for the Lopez majority, issued the statement cited in the disclosure.

What does this dispute signal for corporate governance standards and investor protection in Philippine energy firms with large infrastructure assets? Share your perspective on how this may affect investor confidence and pension fund exposure in the sector.

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