First Gen directors reaffirm support for Prime Infra hydro deal

THE independent directors of First Gen Corp. reaffirmed their support for the company’s investments in two pumped-storage hydroelectric (PSH) projects of Prime Infrastructure Capital, Inc. (Prime Infra), saying the projects underwent a thorough review process and would benefit the company and its stockholders.

“At the end of a thorough review process, we concluded that First Gen’s investment in both PSH projects will benefit First Gen and its stockholders,” according to a press statement signed by independent directors Alicia Rita L. Morales, Edgar O. Chua, and Manuel Francisco I. Ayala.

The directors said they exercised “objective and independent judgment” in evaluating the projects — the 600-megawatt (MW) Wawa pumped-storage hydroelectric project in Rizal province and the 1,400-MW Pakil pumped-storage hydroelectric project in Laguna.

The statement comes amid questions raised by members of the Lopez family over the structure and valuation of the transaction.

Based on earlier company disclosures, First Gen initially sought to acquire a 40% stake in Prime Infra’s pumped-storage hydro assets for P75 billion before the transaction was revised to a 33% stake valued at about P62 billion.

The directors said the P61.87-billion valuation agreed upon by First Gen and Prime Infra for First Gen’s 33% ownership in the projects “represents an equitable and justifiable consideration” for the years and substantial resources that Prime Infra had devoted to development activities and to removing major risks and hurdles to the projects.

They said the premium recognizing the projects’ development milestones is a typical consideration in mergers and acquisitions transactions.

The directors also said projected annual earnings from First Gen’s 33% stake in both projects are estimated at P16 billion upon project completion.

“We, therefore, stand four-square behind our decision to support both projects, which all members of First Gen board unanimously approved,” the directors said. — Sheldeen Joy Talavera