BDO Unibank, Inc. (BDO) has formalized its support for First Gen Corporation’s (First Gen) strategic expansion into renewable energy by issuing standby letters of credit (SBLCs) totaling PHP 24.75 billion.
The financing facility, divided into tranches of PHP 9.9 billion and PHP 14.85 billion, supports First Gen’s acquisition of a 33% stake in Prime Hydropower Energy, Inc. (PHEI). The acquisition was executed through First Gen’s wholly-owned subsidiary, FGEN Aqua Power Holdings, Inc.
PHEI, a member of the Razon Group, is currently developing two massive pumped storage hydro projects essential to the Philippines’ energy transition:
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The 600MW Wawa Pumped Storage Hydro Project
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The 1,400MW Pakil Pumped Storage Hydro Project
By securing a stake in these projects, First Gen reinforces its position as a leader in the low-carbon energy sector, leveraging BDO’s capital to expand its renewable portfolio.
A key feature of this financial agreement is the inclusion of specific covenants designed to ensure leadership stability within the First Philippine Holdings (FPH) group. BDO’s issuance of the SBLCs was conditional upon strict “Change of Management Control” provisions.
These covenants stipulate that the continued active involvement of Federico R. Lopez (FRL) is vital to the group’s strategic and financial integrity. Under the agreement, an “Event of Default” would be triggered should there be a significant shift in FRL’s leadership role or his family’s ownership stake in Lopez Inc. (currently required to remain at a minimum of 29.17%).
The structure of this deal underscores a unique synergy between financial backing and corporate governance. By linking loan defaults to management changes, BDO emphasizes that the FPH group’s financial footing is intrinsically tied to the unified strategic direction provided by FRL.
“BDO’s support for this acquisition demonstrates a clear recognition that the continued leadership of Federico R. Lopez is indispensable to the FPH group’s success,” the bank noted. “This structure ensures long-term stability as the group embarks on these critical infrastructure projects.”
