First Gen says Razon required provision tying deal to Piki Lopez’s group staying in charge

First Gen Corp. said the controversial clause in its deal with tycoon Enrique Razon Jr.’s Prime Infrastructure was required by the latter as it pushed back on claims it was structured to favor current management.

The clause means the deal depends on company CEO Federico “Piki” Lopez and his team staying in control.

If they are removed, Prime Infra can leave First Gen exposed to billions of pesos in losses.

“Prime Infra’s request for inclusion of the CMC [change of management control] provisions shows the level of trust and confidence that Prime Infra has in FRL and his management team,” First Gen said in a statement on Thursday.

“Under the leadership of [Piki Lopez], First Gen also has consistently proven profitability with its earnings exceeding P100 billion during the past five years,” it added.

The issue has gained urgency as a power struggle within the Lopez family raises the risk of changes at the top as the majority bloc, led by Piki Lopez’s cousin, Eugenio “Gabby” Lopez III, moved to oust him over loss of trust.

Meanwhile, First Gen said such CMC arrangements are common in large energy projects and would only apply within a limited period, meaning any impact is not automatic.

“It 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.

—Edited by Miguel R. Camus