A bitter dispute within the Lopez family over a P61.875 billion hydropower investment by First Gen Corporation has escalated into a major corporate governance crisis, challenging the fundamentals of minority shareholder protection in the Philippines. The majority family bloc alleges a P50 billion "transaction premium" was improperly paid, while the company defends the deal's terms. Regulators are now pressed to reconcile conflicting narratives and enforce disclosure rules.
The ongoing dispute within the Lopez family regarding First Gen Corporation has escalated into a critical test of minority shareholder protection in the Philippines . The conflict centers on a major hydropower investment and allegations of financial mismanagement, raising profound questions about corporate governance and transparency.
The majority branch of the Lopez family, which controls 71% of Lopez Inc., the private holding company at the apex of the group, publicly denounced a deal orchestrated by their cousin Federico "Piki" Lopez. They characterized his signature hydropower acquisition as "horrible" and demanded regulatory intervention to force full disclosure of the transaction's financial details.
According to the majority, Piki agreed to pay Prime Infrastructure Holdings P50 billion as a "transaction premium" - essentially an entry fee to join Prime Infra's hydropower business. They contrasted this with only P25 billion being earmarked as "construction equity" for the actual building of dams. Their statement argued that, in effect, Piki funded the entire project, which has no cash flow for years and faces significant completion risks, describing it as detrimental to First Gen and its shareholders.
The majority's accusations rest on internal board documents they claim to have recently accessed, but which remain undisclosed publicly. The specific P50 billion figure is the most detailed financial claim made by the majority cousins during three months of public conflict. Initially, First Gen did not directly address this breakdown.
However, after the Philippine Stock Exchange (PSE) requested clarification on media reports, First Gen issued a response on June 10. It defended the premium as standard practice, reflecting approximately five years of development work completed before First Gen's involvement. Piki's camp then rebutted the majority's claims, calling them "erroneous, malicious" and demonstrating a fundamental misunderstanding of mergers and acquisitions.
This exchange highlights a stark divergence between the majority's interpretation of internal records and First Gen's public filings to the stock exchange. Regulatory bodies, including the PSE and the Securities and Exchange Commission (SEC), are now under pressure to resolve this discrepancy and determine whether proper disclosure obligations have been met.
First Gen Corporation is a listed energy company on the Philippine Stock Exchange, meaning it is subject to stringent disclosure rules for material information that could influence investors. The hydropower deal, involving a 40% stake (later reduced to 33%) in Prime Infra's pumped storage hydroelectric portfolio, was executed in stages with mandatory filings.
The board approved a Binding Heads of Terms Agreement on February 13 for a total price of P75 billion, with P62.5 billion said to fund construction and equity needs. The final contracts signed on March 6 reduced the total investment to P61.875 billion, and these terms were filed with the exchange on March 9.
The projects - the 600-megawatt Wawa in Rizal and the 1,400-megawatt Pakil in Laguna - are not expected to be operational before 2030, meaning years of construction with no immediate revenue. The core controversy now revolves around how the purchase price is allocated between a development premium and construction capital, and whether the minority shareholders received a clear, accurate picture of the investment's structure and risks.
The outcome of this fight could reshape how related-party transactions are scrutinized and disclosed in the Philippine market, with lasting implications for corporate governance standards.
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