First Gen Corporation has dismissed allegations from a majority faction of its founding family claiming it paid an excessive ₱50 billion premium for a stake in a pumped-storage hydropower project, stating the accusations stem from a misunderstanding of corporate finance.
In a disclosure to the Philippine Stock Exchange on Wednesday, June 10, the Lopez-led power producer clarified that the family bloc’s figures relied on an outdated 40% acquisition framework.
The transaction was actually restructured earlier this year, resulting in subsidiary FGEN Aqua Power Holdings Inc. acquiring a 33% equity interest in Prime Hydropower Energy Inc. for ₱61.87 billion.
Prime Hydropower, a unit under Enrique Razon Jr.’s Prime Infrastructure Capital Inc., is currently developing the Wawa and Pakil pumped-storage hydro facilities.
First Gen broke down the ₱61.875 billion total outlay:
- ₱12.5 billion: Paid to Prime Infrastructure for 6.67% of common shares.
- ₱49.375 billion: Allocated for a 26.33% stake via primary share subscriptions.
The payment structure involves an immediate ₱16.5 billion cash release, two Standby Letters of Credit totaling ₱24.75 billion due in 2027 and 2029, and ₱20.625 billion to be drawn gradually based on board-approved funding calls.
Addressing criticism over the deal’s transparency, First Gen explained that premiums are standard practice in mergers and acquisitions and are naturally factored into asset valuations.
The company noted that the premium accounts for Prime Infrastructure’s substantial upfront investments over the last five years to de-risk the projects. These milestones include reaching financial close in 2025, securing long-term contracts under the Green Energy Auction Program, and advancing early construction phases.
Furthermore, the firm defended its decision to scale back its stake from 40% to 33%, rejecting claims that it forfeited crucial veto rights. Management characterized the adjustment as a strategic capital allocation decision designed to preserve liquidity for other high-potential energy projects in its development pipeline.
First Gen emphasized that liquidity considerations outweighed any minor rights tied to a 40% shareholding, adding that it remains free to renegotiate a larger stake with Prime Infrastructure in the future.