As Lopez firms postpone elections, who signs off if Barito’s $5-B offer for EDC gets serious?

At 9:05 pm on Friday, July 17, an email arrived at First Philippine Holdings Corporation (FPH) from the Securities and Exchange Commission’s (SEC) “Ad Hoc Committee on Matters Concerning the Lopez Group of Companies.” FPH’s annual stockholders’ meeting (ASM), scheduled for July 27, would have to be rescheduled to a date within 60 days. And a board election, which the committee had already told FPH it could hold on July 27, would still need to happen, just not on that date. Two days earlier, FPH’s listed parent, Lopez Holdings Corporation, had filed its own notice with the exchange. Its annual meeting, already pushed once from June to August, was being postponed again, this time to September 14, so the company could answer a fresh round of questions the SEC had raised about the documents it must give shareholders before a vote. And weeks before either of those filings, on July 2, media group ABS-CBN Corporation told the exchange that its own meeting would move from July 24 to August 19, for a reason that needed no further explanation to be alarming: The media giant had received zero nominations for its board of directors. Three Lopez companies, three postponed meetings. And now, sitting on top of all of it, a US$5 billion offer for the group’s most valuable asset that none of these companies is currently positioned to accept or refuse. Why a family fight reaches the power sector These postponements matter to anyone with money in these companies, and to anyone simply trying to understand why a family argument in a Mandaluyong court reaches the country’s energy sector. The Indonesian company PT Barito Renewables Energy wants to buy Energy Development Corporation, or EDC, the geothermal producer that generates most of First Gen Corporation’s revenue (related story below). Any real version of that deal will need approval from the companies that sit above First Gen in the Lopez ownership chain. Those are First Philippine Holdings and Lopez Holdings Corporation. Neither board has been able to hold an election this year. What a missing election actually means Under the Revised Corporation Code, a company’s directors are elected for a one-year term, but the law adds a crucial phrase: they serve for that year “and until their successors are elected and qualified.” That phrase is what lawyers call the holdover rule: If an annual meeting is postponed, or if an election cannot be completed at that meeting, the sitting board does not vacate its seats. It simply keeps governing, unelected for another cycle, until stockholders finally get to vote. Boards still governing without a fresh vote are not inherently a problem. Companies sometimes delay meetings for routine reasons. The trouble starts when a board stays in power for an extended stretch without facing shareholders. A board that makes decisions cycle after cycle without a current vote is running on inertia rather than a live mandate. This is the situation now at FPH and Lopez Holdings, and it is the context in which a $5-billion offer has landed. (READ: [Vantage Point] When independent directors stop being neutral) The family war is the trigger These ASM postponements are happening in the middle of a family war. The fight is among the third generation of Lopezes, the cousins now running a conglomerate that spans media, power, infrastructure, real estate, and more. Their fathers, the second generation, are gone. Read against that backdrop, the postponements look less like routine scheduling and more like another symptom of the internal dispute. Debt, discipline, and daring: Inside the Lopez Group’s high-risk bets The Lopezes, presidents, and the cost of dissent Lopez vs Lopez: The secrecy fight behind the Razon power deals ABS-CBN‘s case makes that point most clearly. Lopez Inc., the private holding company at the center of the war, controls 78.4% of ABS-CBN’s voting shares. When a company’s dominant shareholder cannot or will not put forward a single nomination for its own board, that is not stockholder apathy. It is a controlling family too divided to agree on who should represent it. Lopez Holdings‘ trouble had a clearer paper trail. Two of its three independent directors, Roberto Panlilio and Consuelo Garcia, resigned within days of each other in early May, both citing personal reasons, both declining to be nominated for another term. Independent directors exist specifically to give minority shareholders and the investing public a set of eyes in the boardroom that does not answer to the controlling family. Losing two, in the same week, at the peak of an intra-family fight over board control, is the kind of exit that invites the very question the company never had to answer on the record: what did they see, and why leave now? (READ: When the ASM has no election: What the Lopez family dispute means for every investor) Roberto Panlilio Consuelo Garcia The first postponement, from June to August, was meant to give Lopez Holdings time to find replacements the SEC would accept. The second postponement moves the meeting to September because of a separate SEC review of its disclosure documents. That is two postponements in one year, both tied to the same underlying problem: the company cannot yet put together a board its regulators are satisfied with. FPH‘s story is the most telling of the three, because the rules kept moving. On July 2, the SEC told FPH that it could go ahead with its planned annual meeting on July 27, provided it followed that Mandaluyong court order protecting Federico “Piki” Lopez’s position. FPH began preparing and coordinating with the SEC committee, trying to balance these legal requirements against the deadline. Then, on that Friday night at 9:05 pm, the SEC sent a second letter. This time the committee didn’t change the rules for the election, but it did move the date, ordering FPH to push the meeting back to a new date within the next 60 days. The SEC said this was to give the company “sufficient time to undertake the steps necessary” for the meeting, a phrase FPH’s own official filing leaves unexplained. The effect is striking: for weeks, regulators had been pushing for this board election to happen, yet FPH, for reasons not spelled out in public, needed more time to get it done. First Gen Corporation is the only company in the group that has avoided all these. It held its annual meeting on May 28 as scheduled and elected a new board. It is the only listed Lopez company where the current directors were confirmed by a shareholder vote this year. It is also chaired by Piki Lopez, the cousin the majority is trying to remove. Now add Barito First Gen is also the company that received the Barito offer. On July 15, First Gen confirmed that Barito had made an unsolicited, indicative, and non-binding bid worth more than $5 billion, roughly P308 billion, for EDC, the geothermal subsidiary that produced P48.6 billion in revenue last year, 87% of everything First Gen earned. First Gen added that there have been no discussions between the parties, no agreements signed, and no advisors appointed. Investors reacted immediately: First Gen’s share price jumped as much as 33% intraday before closing lower, a swing that shows investors are excited about the price but unsure the deal can actually happen. First Gen controls how EDC is run, holding 65 out of every 100 votes on its board, through a company it owns called Red Vulcan. If Barito wants control of EDC, and not just a slice of it, the deal has to go through First Gen, and through the companies up the ownership chain that control First Gen: FPH and Lopez Holdings. Both of those boards are currently governing without a fresh vote, their elections postponed. There is a second, narrower path. EDC’s remaining shares are held by Philippine Renewable Energy Holdings Corporation, a vehicle jointly owned by Australia’s Macquarie Group and Singapore’s sovereign wealth fund GIC. Together they hold roughly 35% of EDC’s votes but about 55% of the money EDC makes, a common split where one side steers the company and the other mainly collects the returns. Barito could buy that stake directly from Macquarie and GIC without asking a single Lopez company for permission, since those are willing sellers under no obligation to the family. On paper, it would look like a simple change of foreign hands, one set of overseas investors replaced by another. What Barito historically wants Would Barito actually settle for that? Legally, yes. Barito could buy the Macquarie and GIC stake and simply hold a large minority position in a company still controlled by First Gen. But Barito’s own record suggests this is not how the company operates. Every major move Barito has made in renewable energy has been about getting to majority or full ownership, not staying a minority partner. In 2018, Barito Pacific bought 66.67% of Star Energy Geothermal for $755 million, a controlling stake from the start. In 2022, it bought the remaining 33.33% from Thailand’s BCPG for $440 million, taking full ownership. News coverage at the time described it plainly: Barito had gotten full control. In its Salak-Darajat and Wayang Windu geothermal assets, Barito kept raising its stakes over time and has stated publicly that it wants to own 100% of Star Energy Geothermal outright. Even its move into wind power followed the same pattern: Barito Wind bought 99.99% of an operating wind farm in Sidrap, and 51% of three others still under development. The pattern is consistent. Barito buys to run the assets, not to collect a check from the sidelines. Macquarie and GIC are financial investors. Their business is to hold a stake and eventually sell it for a return. Barito is different. It is an operator that consolidates geothermal fleets and runs them. That difference matters for what happens next. A minority stake in EDC would give Barito a share of the profits but no say over how the company is run. That is not the kind of deal Barito’s history suggests it wants. To get the operational control that fits its pattern, Barito needs First Gen to sell down its stake or agree to cooperate, and that decision runs straight up the Lopez ownership chain, from First Gen to FPH to Lopez Holdings to Lopez, Inc., the same chain currently stuck in holdover boards and a court injunction. Put simply: the minority path is available to Barito, but it does not fit what Barito historically wants. The path that does fit runs directly into the family fight. Why Barito wants EDC Barito is the renewable energy arm of the Indonesian conglomerate Barito Pacific, and it already controls Star Energy Geothermal, Indonesia’s largest geothermal producer. What it lacks is scale beyond its home market. EDC would deliver that in a single stroke. It runs 16 geothermal stations with roughly 1,300 megawatts of installed capacity, about 6 of every 10 geothermal megawatts produced in the Philippines, plus a wind farm, a hydro complex, and a small solar fleet. Its flagship Tongonan field in Leyte produces 637.2 megawatts on its own, putting it among the largest geothermal complexes on Earth, behind only The Geysers in California and Italy’s Larderello (related story below). This is baseload renewable power: electricity that runs around the clock regardless of weather, the kind a fast-growing region hungry for clean, steady supply prizes most. Combining Star Energy and EDC would hand Barito the largest geothermal footprint in Southeast Asia at once, along with five decades of drilling data, proven reservoirs, and operating expertise that would take a generation to build from scratch. For a company racing to expand its renewables portfolio across a region hungry for clean baseload power, EDC is not a bargain hunt. It is Barito’s fastest available route to regional scale. Where this leaves the family This is also, in plain terms, the business that pays First Gen’s bills. EDC generated P48.6 billion in revenue last year, 87% of everything the parent First Gen earned. Sell it, and First Gen sells the engine that funds nearly everything else the group does, the same engine the family once gave up its oldest business to finish building. That is the scale of decision now sitting in front of boards that are either unelected, delayed, or working under a court order. Piki Lopez has kept telling employees and investors that First Gen’s value comes from years of patient, disciplined growth. An outside buyer naming a premium price for the company’s most valuable asset, without being asked, is the kind of validation no press release could produce. But a compliment is not a mandate. The same week that validated his strategy is the week that exposed how few people around him are currently in a position to act on it, because the boards that would have to approve or block a deal this size are either unelected, delayed, or bound by a court order that limits what they can decide. The number itself measures how far EDC has come since the family first bought it. Barito’s offer values the company at more than P300 billion. When the Philippine government privatized EDC in 2007, the whole company sold for P58.5 billion. Whatever else is unresolved in the Lopez group, the geothermal bet the family sold Meralco to complete has grown more than fivefold since the day they bought it. That growth is also why the question this story keeps circling back to has no easy answer. FPH and Lopez Holdings, the two boards positioned to weigh in on any real version of this deal, cannot currently hold an election. Barito has put a number on the table regardless, and started the clock. The family now has to work out, board by holdover board, whether it is in any position to answer. – Rappler.com Lala Rimando wrote about Philippine business, and managed newsrooms, including Newsbreak, ABS-CBN, Rappler, and Forbes, for over 25 years. She’s now based in La Union, taking care of her mom with dementia, and working on the multimedia biography of the late John Gokongwei.