Cheyenne Suarez

First Gen’s 40 to 33 percent stake drop not presented to and approved by the board

Article (news)

ABS-CBN News

Lopez majority:1. Move has no board mandate and legal basis;2. Which deal prevails?3. Regulators must step in4. First Gen admits it cast aside shareholder rightsFirst Gen’s reduction of its Prime Hydropower Energy, Inc. (PHEI) stake from 40 percent to 33 percent was not presented to the board, has no board mandate, and therefore has no legal basis, the family majority said.The questionable move was made just three weeks after the 40% deal, worth P75 billion, was approved on February 13, including a P50 billion premium that would reimburse Prime for more than all its expenses to date.  At 33 percent, the deal would cost P62 billion, with a P42 billion premium, leaving Prime with 67 percent equity and First Gen carrying all the risks, even as a minority with no rights.“Which deal prevails now? How could the board’s independent members -- Manuel Ayala, Alicia Rita Morales, and Edgar Chua -- claim everything was ‘unanimously approved’ in a public statement? In the first place, the deal, when it was still at 40 percent, was hidden under ‘other items’ on the agenda and discussed only for an hour,” it said.These board members even touted the fat dividends from the deal that would come many years from now. The family retorted: “If it is so good, why reduce the stake at all and surrender seven points of ownership and minority veto rights?&quot;First Gen said in its public statement that it had to scale back to fund “high-potential assets in the pipeline”. The family said: “If the turnaround happened only after three weeks, does that mean directors were not given enough information to properly guide management? Didn’t they know First Gen’s liquidity position?”The Social Security System and the Government Service Insurance System are also investors who know that anything “disadvantageous to the government” should not have passed muster, it said.It added: “The shareholders must know. The regulators should step in to question this brazen move, the disclosures that were months late, the poison pills, and the cross-default that threatens even First Gen’s sister companies that are not involved in the deal.”The family also slammed First Gen, which said in its disclosure that the reduction was due to “significant financial considerations (that) outflank any rights that are provided to a 40% shareholder.” It said that “this is an admission that shareholder rights had been cast aside and their financial interests subordinated to one man’s job security.” The family also belied First Gen’s claim that “there is nothing that will prevent First Gen from engaging in discussion with Prime Infra to scale the investment back up.”The family said there is nothing that guarantees Prime will give up what First Gen gifted it, and dared Piki to come out with Prime’s written commitment to discuss selling back the forgone shares and at what valuation.

First Gen’s reduction of its Prime Hydropower Energy stake from 40 percent to 33 percent was not presented to the board, has no board mandate, and therefore has no legal basis, the family majority said.

First Gen’s reduction of its Prime Hydropower Energy stake from 40 percent to 33 percent was not presented to the board, has no board mandate, and therefore has no legal basis, the family majority said.