First Gen: Premium paid ‘standard consideration’ in M&A transactions

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June 11, 2026 | 12:00am

MANILA, Philippines — First Gen Corp. has refuted the fresh wave of allegations hurled by the Lopez family majority against its chairman and chief executive officer Federico “Piki” Lopez.

Responding to the Lopez family majority’s claim that Piki agreed to pay Prime Infrastructure P50 billion as premium for the P75-billion hydropower deal, First Gen clarified that the premium paid is a standard consideration in M&A (merger and acquisition) transactions and one that is incorporated in the acquisition cost.

“The premium that First Gen effectively pays Prime Infra as a result of the acquisition is not free, superfluous money, but a payment in consideration of Prime Infra’s own investments and costs poured in over many years that brought the projects to its de-risked state at the time of First Gen’s acquisition,” the company said in a stock exchange filing.

First Gen explained that its acquisition comes after Prime Infra has achieved financial close and carried out major development activities, including acquiring development rights and authorizations, securing offtake agreements and commencing construction of the Wawa and Pakil projects.

At that point, it said the projects had successfully passed the development phases of highest risk and had entered a fairly stable implementation state, with  largely the construction risk remaining.

“Hence, claiming that First Gen chairman and chief executive officer Federico R. Lopez funded the whole project is erroneous, malicious and shows an utter lack of understanding of basic M&A transactions,” the company said.

The Lopez family majority, in a statement on Tuesday, accused Piki of committing “a horrible deal” after agreeing to pay Prime Infrastructure P50 billion as transaction premium and P25 billion as construction equity in First Gen’s P75-billion deal to buy 40 percent of Prime’s hydropower business.

The 71 percent majority said it learned about the premium, which it dubbed “scandalous,” only recently from board documents.

As to the reduction in its stake from 40 percent to 33 percent, First Gen said the move was carried out strategically and prudently, taking into account its other future projects and projected capital allocation.

With a significant number of high-potential assets in the pipeline, First Gen  said that its management thought it best to scale back the hydro investment to make sure that the company would have the liquidity to fund all its projects.

“These significant financial considerations outflank any rights that are provided to a 40 percent shareholder. In any case, should First Gen later determine that it is in the best interest of the company and its shareholders to increase its stake in the hydro projects, there is nothing that will prevent First Gen from engaging in discussion with Prime Infra to scale the investment back up,” the company said.

Meanwhile, on the claim that Prime Infra would need to put up only P625 million to finish the project in 2030 for 67 percent of the profits, First Gen said that Prime Infra has already incurred significant costs and expenses in the development and construction of the projects for more than five years, resulting in First Gen acquiring a derisked project.