Lopezes seek SEC, PSE probe on First Gen’s ‘poison pill’ disclosures

MANILA, Philippines — The Lopez family majority has called on the Securities and Exchange Commission (SEC) and the Philippine Stock Exchange (PSE) to investigate First Gen Corp.’s delayed disclosure of “poison pills” or change of management control provisions in the company’s business deals with Prime Infrastructure.

The majority, which represents three branches of the Lopez clan, said the two poison pills, which shield tycoon Federico “Piki” Lopez from ouster, were disclosed six months and two months late, respectively.

It said this is “in a clear violation of stock market rules meant to protect the investing public by giving them full, fair, accurate and timely information.”

The majority is referring to deals in which Prime Infra bought 60 percent of the gas assets of First Gen for P50 billion, as well as First Gen’s purchase of 40 percent of Prime’s hydropower business for P75 billion, which was later on reduced to 33 percent.

The majority is urging the SEC and PSE to conduct an investigation and ask First Gen to explain why it did not disclose the poison pill provisions in the two earlier transactions   in November last year and  February this year.

SEC chairperson Francis Lim told The STAR that it is for the PSE to determine if the alleged poison pills are “disclosable.”

The majority said they have also been asking for copies of the investment agreements to obtain details of the transaction, but to no avail so far.

“These amounts are so significant that they are roughly equivalent to a third or so of the market capitalization of First Gen and would affect shareholder dividends and eventually share prices if triggered, as they should have been cleared with them, not just with the board that, Piki claimed, approved them,” the majority said.

“First Gen only admitted the existence of the poison pills when the majority exposed it, and the Philippine Stock Exchange asked for a clarification. In its reply, First Gen said the November 2025 poison pill would only come into play if the February 2026 pill is triggered,” it said.

The majority, however, claimed that the November pill, “if indeed it was originally there, was prescient and saw a future transaction that was non-existent at the time.”

“Was there really a poison pill in November? Or was it an afterthought, an insertion?” the majority asked.

“If the November pill would cost First Gen P8 billion, why did Piki hide it from his shareholders? Was it because he could not explain that a poison pill in a non-existent agreement would trigger the November pill, meaning Piki’s pill would go back in time and have a retroactive effect?” it said further.

The majority is also questioning whether the company fully informed the board and its independent directors about the provisions, “especially since the two would cost First Gen and ultimately its shareholders P24 billion in penalties.”

“If the board did approve, why didn’t its members call out management for not disclosing it 10 minutes after the deal was done, as PSE rules required? And why not when the two deals were disclosed without any mention of them?” It said.

First Gen earlier explained that the change of management control provision serves as a significant protection mechanism for a business partner and is recognized as a relatively standard provision often in contracts for projects in industries such as energy and infrastructure, which involve huge investments.

The company said the provision is also known as the “key man clause” because the success of projects under contracts with this provision depends heavily on the competence, relationships, or reputation of certain individuals.

The continued active involvement of these “key men” is deemed essential by the party requesting the clause, it said.

First Gen noted that Prime Infra’s request to include the CMC provisions demonstrates the level of trust and confidence the group has in Piki and his management team.