First Philippine Holdings Corporation
Encyclopedia
First Philippine Holdings Corporation (First Holdings) is a holding company whose core business is power generation
and distribution
with strategic investments in manufacturing and property. First Holdings is a member of the Lopez Group of Companies.
Its power generation subsidiary, First Gen Corporation, is now the largest vertically integrated power generation company in the Philippines with an installed capacity of 2, 582 megawatts (MW). Its power distribution associate, Manila Electric Company
(Meralco),the largest power distribution company in the country, operates in a franchise area of 9,337 km2. This franchise area covers 25 cities and 86 municipalities including Metro Manila
, the entire provinces of Bulacan
, Rizal
and Cavite
; parts of the provinces of Laguna, Quezon
and Batangas
; and 17 barangays in Pampanga
. Meralco's franchise area produces 49 percent of the country's gross domestic product, with 32 percent in Metro Manila alone.
First Philippine Electric Corporation (First Philec) is the holding company for all of its manufacturing businesses such as dry-type transformers and silicon wafer-slicing. First Philippine Industrial Park (FPIP) is the only Integrated Management System certified industrial park in the Philippines while Rockwell Land Corporation (Rockwell) is the first property firm in the country to develop a complete, high-end, inner-city community.
First Holdings maintains its corporate headquarters at the 4th floor of the Benpres Building in Ortigas Center
at Pasig City
, Philippines.
pushed for a larger Filipino role in the nation's economic activities. Indeed, the next decade witnessed the flowering of Filipino entrepreneurial spirit. Among the many Filipino entrepreneurs whose businesses flourished in this period was Don Eugenio Lopez Sr. (Don Eugenio), an entrepreneurial and visionary businessman who would soon establish a conglomerate that would become First Philippine Holdings Corporation.
Lopez graduated from the Ateneo de Manila University
in 1919, with an AB Degree, Cum Laude. He went on to study law in the University of the Philippines
and after passing the bar exams, he underwent a year of post graduate studies in law at Harvard University
.
Lopez had various businesses. In 1932, he established the Iloilo Negros Air Express Company. He also made his mark in sugar milling, with the acquisition of the Binalbagan-Isabela Sugar Company (BISCOM). He was a power in media, owning The Manila Chronicle newspaper and ABS-CBN Broadcasting Corporation, the Philippines' largest media conglomerate. He was also one of the founders of the Philippine Commercial and Industrial Bank (PCI Bank).
But in 1962, he bought the biggest company in the Philippines, Meralco.
cited that the company's operations and equipment were comparable to the best US power firms.
But although Meralco was a stable and highly profitable enterprise, the government's decree of pushing for more Filipino participation in the business prodded General Public Utilities (GPU) president Albert F. Tegen, to find a buyer for the company. Tegen approached a number of the leaders in the Manila's business community, including the Araneta-Zobel group, which balked at buying only 5% of the company.
Eventually the key people involved in the buyout of the company – Tegen and Roberto T. Villanueva, BISCOM's Chairman of the Board, crossed paths in New York. Villanueva was pursuing the owners of Victorias Milling Company, a Negros-based sugar company, to make an offer for their firm. However, the owners remained unwilling to sell.
Knowing that Villanueva was instrumental in the successful Filipino buyout of several companies, Tegen asked him to explore the possibility of the Lopez Group buying Meralco.
Even Lopez knew how risky the Meralco deal would be, for none of his previous business acquisitions amounted to its sale price. Buying Meralco and running it well required tremendous capital, managerial talent, and personal focus. But Don Eugenio was a visionary - he recognized the opportunities in the power industry.
Two syndicate of banks were established to handle this big transaction - one was a US Bank headed by Citibank
and another local bank headed by PCI Bank. The Lopez Group paid a 10% down payment and the balance was paid over a 10-year period.
So on June 8, 1961 Tegen and Villanueva signed a preliminary agreement between GPU and the Lopez Group. Lopez needed a new corporate entity to take over the Meralco assets. Two days after, Meralco Securities Corporation (MSC) was established. It was principally organized to acquire ownership of the Manila Electric Company and manage its business. In the years that followed, MSC went beyond being an acquisition and management tool for Meralco – it also became an important company in its own right.
Initially, its capital stock was at Php 450M and the number of initial stakeholders was 605. Its 14 initial incorporators comprised some of the brightest businessmen at that time: Rafael Anton, Salvador Araneta, Antonio Delgado, Senen Gabaldon, Emilio Gonzales La'O, Ricardo Ledesma, Eugenio Lopez, Eugenio Lopez, Jr.
(Geny), Alfredo Montelibano, Ernesto Oppen, Jr., Ernesto Rufino, Sr., Jose Soriano, Dolores De Tuazon, and Roberto Villanueva.
For the first few years, MSC had no independent life; its fate was tied to the success of Meralco. Because it was primarily focused on acquiring Meralco, it was virtually unknown. But after 1966, MSC's time to shine came.
Up to 1962, Meralco was greatly dependent on the National Power Corporation
(NAPOCOR) for 35% of its power requirements. While NAPOCOR had a program for expansion, the program was delayed and it took them more than two years to put up a power plant
. It built a new power plant every 18 months, and expanded its generating capacity fivefold, from 300,000 kW to 1.5 million kW in 10 years. At this time, Meralco's rates were among the lowest in the world.
, while retaining some of the American managers like Lee Garner, Russ Swartley and Steve Psinakis. Eventually, most of these managers headed various local and multinational corporations.
By 1966, its initial financial pressures were beginning to ease. Paterno's success in tapping new funds from international capital markets freed the company from major financial worries for at least the next four years. In late 1966, Meralco shareholders received dividends for the first time. In the same year, Don Eugenio created a Department of Economic Research and Development headed by his son, Oscar M. Lopez. Together with Ernesto "Ernest" Rufino, Jr., Oscar sought to make MSC as broad as possible. Their efforts focused on the following areas: expanding the Meralco franchise area, computer services, construction, banking, and financial services.
Oscar and Ernest saw the need to bring fuel from Batangas
to Sucat
in the cheapest possible way. As a result, MSC created the first commercial pipeline in the country. The pipeline transported bunker oil to Meralco power plants. Even oil companies such as Pilipinas Shell
and Caltex
needed to transport white oil
products more efficiently from Batangas to other oil depot
s, as they were still using barges and trucks. Thus, two pipelines were created. One transported black oil
products which included bunker fuel and crude oil, and the other ferried white oil products such as gasoline, diesel, and LPG. This new company, called Meralco Securities Industrial Corporation, was created on March 31, 1967. It was later renamed as First Philippine Industrial Corporation (FPIC).
Aside from the pipeline industry, MSC created Philec and many other subsidiaries.
But during the term of then-President Ferdinand Marcos
in 1970, the Philippines was confronted with its worst economic crisis
which stemmed from economic mismanagement
, affected the government's ballooning debt, the peso
devaluation, and other factors. The crisis lasted for 25 years and Meralco, the cornerstone of the MSC conglomerate, was the hardest hit. The annual increase in electricity demand was anemic while the company's net income dropped from Php 62.2M in 1969 to Php 10.3M in 1971.
It was not only the financial crisis that challenged Meralco. At that time, the Philippines was also plunging deeper into a political crisis. While Philippine society was modernizing and becoming more diverse, politics was becoming increasingly polarized between the conservative elite and emergent forces calling for political, social, and economic change.
Public discontent with the administration grew from alleged issues of corruption and human rights violation. Consecutive protests took place – showing the Filipinos' grievances over the social injustices they were witnessing. This was what later became known as the First Quarter Storm
.
On September 21, 1972, President Ferdinand Marcos issued Proclamation No. 1081
, placing the entire country under martial law. Along with this, he also issued Letter of Instruction 2 which instructed the military to take over all public utilities such as Philippine Long Distance Telephone Company
and Meralco. And shortly after the midnight of September 22, elements of the 51st Army Engineering Brigade entered the Meralco compound and took over the power company.
The Marcos regime used various tactics to force Don Eugenio to hand over his controlling stake in MSC and Meralco to the dictator and his cronies. Two of which included a government-imposed cut in power rates and the imprisonment of Geny, his eldest son, on trumped-up charges.
Under duress and with fear of not seeing his son Geny set free, Don Eugenio was forced to sign an agreement on November 29, 1973, ceding ownership of MSC to Benjamin "Kokoy" Romualdez, brother of First Lady Imelda Marcos
and an alleged Marcos bagman. Despite this, Marcos reneged on his promise to set Geny free even until Don Eugenio's death on July 6, 1975 in San Francisco, USA.
In 1978, MSC was renamed First Philippine Holdings Corporation. First Holdings went on a huge expansion program, which included the acquisition of 25% of Pilipinas Shell. First Holdings also organized another wholly owned subsidiary, First Holdings International (FHI), to coordinate the overseas activities of Engineering and Construction Corporation of Asia and the Pacific Engineering Company, Inc. The establishment of FHI positioned the company for expanding its contracting and project management services abroad, particularly in the Middle East, which was then regarded as the primary source of profitable undertakings.
But the magnitude of its investments and the unfavorable conditions in the financial market, led to the near-collapse of First Holdings by the mid-1980s. The country was experiencing a prolonged recession in the second half of 1983. The country's fall-out resulting from the assassination of Senator Benigno S. Aquino
spared no one. Massive capital flight of international investors immediately followed. Almost overnight, credit from both foreign and local sources dried up. Forcing bankruptcy, management of corporate debt became a major concern of the company. To eliminate its debt, First Holdings sold its equity in Pilipinas Shell Petroleum Corporation while First Holdings Center in Makati
was sold to a group of banks.
Amidst divestment of assets and scaled down activities, the company suffered years of consolidated net losses. In 1985, this situation was further aggravated with the termination of its sub-contract for the Hail electrification project in Saudi Arabia
.
With the national economy in ruins and failure of the electoral process, calls for reform were coming from the local and foreign community. President Marcos was hounded by pressure from many sides – an increasingly restive people, a rapidly failing economy, growing doubts by foreign creditors, a hostile international press, and unbridled corruption of his closest allies.
With the economy in ruins and increasing pressure, both internal and external, Marcos called for "snap" elections
. What was once an unruly and fractious opposition came together in time to put up one presidential candidate, Corazon "Cory" Aquino
, widow of Ninoy. The election took place with international media representatives and invited observers of foreign governments covering the event. Many Filipinos volunteered as poll watchers – guarding the ballot boxes with their life. Such courage, however, did not prevent the widespread fraud and terrorism which caused the failure of the electoral process.
Subsequently, members of the military, led by the Minister of National Defense and the Vice Chief of Staff of the Armed Forces
broke with President Marcos and announced their support for Corazon Aquino, whom they regarded as the duly elected president of the Philippines. Filipinos from all walks of life gathered together – giving birth to the historic EDSA revolution. The dark days of dictatorship had ended and democracy was reborn. For First Holdings, these turn of events eventually made its rehabilitation possible.
But it was not only the parent company which needed rehabilitation. Even its subsidiaries had to get moving. There were two principle tasks which had to be done: generating more cash flow and a respectable rate of return for the stockholders. Both of these turned out to be considerable challenges, but the people in First Holdings took them one step at a time - and they prevailed.
After one year, the company was able to reschedule and rearrange most of its debt load by selling some assets. It also began the long process of reacquiring part of its stake in Meralco. And in 1990, the company made its first profit since 1983 of Php 28 million.
It diversified into more businesses and opened new plants. The company took part in developing the Malampaya Project
, the largest and most significant industrial investment in the history of the Philippines which signals the birth of the country's natural gas
industry. In partnership with British Gas plc
, First Holdings created First Gas Corporation Holdings to build and run the first gas-fired combined-cycle gas turbine power plants in the country. Under First Gas are the 1,000 MW Sta. Rita and 500 MW San Lorenzo power plants, both located in Batangas.
This decade also marked the company's entry into infrastructure with the development of the North Luzon Expressway
(NLEX), an 84-kilometer world-class highway – the longest toll road in the country in terms of lane-kilometers.
Responding to the government's call for a private sector to invest in the NLEX project, the Lopez Group took up the challenge of mobilizing funds and mustering managerial expertise.
In 1994, the First Philippine Infrastructure Development Corporation (FPIDC) was formed to enter into partnership with the Philippine National Construction Corporation
for the NLEX project. FPIDC incorporated the Manila North Tollways Corporation (MNTC) in February 1997 as the operating company for the NLEX project. The other stockholders are EGIS Projects S.A. of France, Leighton Contractors Asia Limited
of the publicly listed Australia Exchange
, and the Leighton Group of Australia.
of London. Indeed, the NLEX project took pride in its being the first project financed toll road undertaking in the country and also the first project to achieve financial close outside the power sector despite the global economic crisis.
The company also won the bid for the Subic-Clark-Tarlac Expressway
(SCTEX) in 2007. SCTEX links three prime economic zones in Central Luzon: Subic Bay Freeport and Special Economic Zone
, Clark Special Economic Zone
, and Central Techno Park.
However, in 2008, First Holdings sold its toll road business to Metro Pacific Investment Corporation
, a company with interests in real estate, utilities, and shipping.
In November 2006, First Gen won the bid to acquire the 112 MW Pantabangan-Masiway hydroelectric power plant complex from the Power Sector Assets & Liabilities Management. The following year, First Gen acquired a 60% economic interest in Philippine National Oil Company – Energy Development Corporation (EDC). EDC was established in 1976, to wean the country from its dependence on imported fuels by developing renewable sources of energy
. It is an acknowledged global leader in wet steam field technology and is primarily engaged in the exploration, development, and optimization of geothermal fields
.
Also, in 2008, the first large-scale silicon wafer-slicing plant was inaugurated in the Philippines – First Philec Solar Corp. This subsidiary, a joint venture between First Holdings and the Sunpower of the United States, aims to develop the solar energy industry in the Philippines and to compete with companies providing wafer-slicing services in China, Japan, and Germany.
The Philippines was not spared from the global financial crunch of 2008, and so was First Holdings. While the company enjoyed a favorable business climate in the past years, it was affected with the economic crisis. Currency movements, high finance costs, and other factors caused First Holdings to sell 20 percent of its ownership in Meralco to Philippine Long Distance Telephone Company
(PLDT).
In spite of the challenging year, First Holdings and its subsidiaries reaped a number of achievements from various groups. The parent company received an Integrated Management Systems (IMS) certification for its adherence to quality standards and a gold award for corporate governance
.
First Gas Power Corporation also won the 2008 "Asia Pacific Refinancing Deal of the Year" award from ProjectFinance magazine. The company earned its award for its successful completion of a US$544-million refinancing agreement with nine large foreign banks. According to ProjectFinance Magazine, the deal was a "major achievement" because it was finalized "at a time when lack of liquidity, a spike in labor rates and unwillingness to lend long term had frozen the debt market"
More so, Oscar believed that the success of the Lopez family and their companies owed more to the intangibles of management: values, vision, and leadership. They have ingrained corporate values that go beyond the mere earning of profits. These core values have sustained them through the many difficult times of the past.
as well as other educational institutions.
Don Eugenio believed that a company's greatest asset was its people, and that they should be nurtured accordingly. He was known for his fairness and generosity to its employees. This principle is seconded by Oscar who also believes that a company is only as strong as its people.
First Holdings claims that the total compensation of their employees is over and above industry standards and considered as one of the best benefit packages in the country. Apart from this, employees are empowered to make decisions within their sphere of influence. The employees' personal and professional development are nurtured through the Training & Development opportunities like the Executive Masters in Business Administration and the managerial leadership programs of the Asian Institute of Management are offered and open to its employees.
Each of First Holdings' subsidiaries has its own Human Resources departments and systems, but the parent company handles the talent management of the executives who are deployed in various subsidiaries as seconded employees.
The HR departments of the First Holdings Group are part of the Lopez Group HR Council, where they discuss and exchange their best practices in the group.
First Holdings uses the Malcolm Baldrige Criteria
to cover both its corporate initiatives and corporate social responsibility.
The company's corporate governance has been entrusted to the board of directors. To ensure that independent, objective, and reasoned views are part of its board deliberations, First Holdings has more than what the law mandates of having at least 2 independent directors or at least 20 percent of a company's board membership. To date, the company has five existing independent directors.
In 2009, First Holdings marked two milestones in the company's corporate history.
First, it achieved triple certification when it successfully passed the audits for the ISO 9001, 14001, and OHSAS 18001 standards. It is the only holding company in the Philippines to receive an IMS certification from Certification International.
Second, it received a gold award from the ICD for its commitment to good corporate governance. First Holdings was among only eight companies who received a gold award (a rating between 95 to 99%) for garnering the highest ratings, among 169 publicly listed companies, in the 2008 CG-Sc, jointly conducted by the ICD, Philippine Stock Exchange
and Securities and Exchange Commission.
The corporate initiatives also include standards based systems, management tools, and recognition awards. Part of its management tools include the environment, safety, and health programs (ESH) and the Six Sigma program. The prominent standards systems in use are ISO 9001, ISO 14001 and OHSAS 18001.
Meanwhile, ESH started in 1998 as a corporate initiative for companies in the First Holdings Group which was eventually rolled out for the whole Lopez Group.
began to be used in the Philippines, it had long been practiced by the Lopez Group of companies, like First Holdings. Don Eugenio called for his businesses to continually contribute to the betterment of society.
He even believed that a commercial firm which gives service and real satisfaction to the community, may be more successful than a multi-million corporation which reaps huge profits and then keeps them to itself.
The company's social responsibility programs provide employees with opportunities to help the general public and fulfill their individual interests to be of value to the society. They are inspired to give their time, energy, and resources to help. In this manner, employees are brought together to carry out regular activities to build stronger and closer relations with its local community.
Oscar Lopez also believes that a substantial proportion of the company's earnings should be returned to the people in form of foundations, grants, scholarships, hospitals, and many other forms of social benefits. His concern for the environment found concrete expression in the creation of First Philippine Conservation Inc. (FPCI), which supports the work of Conservation International
(CI) in protecting Philippine biodiversity.
Today, FPCI works to protect the country's largest remaining block of old-growth rain forest in Sierra Madre range
and currently implements the Verde Passage Integrated Conservation and Development in partnership with the CI and First Gas Corp.
Oscar's longstanding concern for eye care led him to create the Asian Eye Institute, a world-class eye care center in Rockwell and donate a mobile eye clinic to the Ophthalmological Foundation of the Philippines.
Oscar M. Lopez has enunciated a policy making employee wellness a priority. An Executive Recharging and Training Program was developed in 1998 and evolved into Corporate Wellness program which is now known as Lopez Lifelong Wellness (LLW).
LLW's goal is to help employees and their families develop a healthy lifestyle that, through voluntary behavioral changes, reduces health risks and maximizes the employee's potential. LLW activities include an annual three-day wellness seminar for all employees, learning sessions, fitness exercises and team-building activities.
Under First Philec, the Electricals Division support electric utilities and comprises Philippine Electric Corporation, First Electro Dynamics Corporation, and First Philippine Power Systems, Inc. The Electronics Division, through First Sumiden Circuits, First Philec Solar Corporation, and First Sumiden Realty, continues to provide much-needed employment and foreign exchange.
The Rockwell Center used to be the site of the Meralco-owned 130 MW Rockwell Thermal plant named after James Chapman Rockwell, Meralco's 2nd and 4th president.
Electricity generation
Electricity generation is the process of generating electric energy from other forms of energy.The fundamental principles of electricity generation were discovered during the 1820s and early 1830s by the British scientist Michael Faraday...
and distribution
Electricity distribution
File:Electricity grid simple- North America.svg|thumb|380px|right|Simplified diagram of AC electricity distribution from generation stations to consumers...
with strategic investments in manufacturing and property. First Holdings is a member of the Lopez Group of Companies.
Its power generation subsidiary, First Gen Corporation, is now the largest vertically integrated power generation company in the Philippines with an installed capacity of 2, 582 megawatts (MW). Its power distribution associate, Manila Electric Company
Meralco
The Manila Electric Company , also known as MERALCO or Meralco, is the Philippines' largest distributor of electrical power.The word MERALCO, is an acronym for Manila Electric Railroad And Light COmpany, which was the company's original name from 1903 to 1919.MERALCO is the Metro Manila's only...
(Meralco),the largest power distribution company in the country, operates in a franchise area of 9,337 km2. This franchise area covers 25 cities and 86 municipalities including Metro Manila
Metro Manila
Metropolitan Manila , the National Capital Region , or simply Metro Manila, is the metropolitan region encompassing the City of Manila and its surrounding areas in the Philippines...
, the entire provinces of Bulacan
Bulacan
Bulacan , officially called the Province of Bulacan or simply Bulacan Province, is a first class province of the Republic of the Philippines located in the Central Luzon Region in the island of Luzon, north of Manila , and part of the Metro...
, Rizal
Rizal
Rizal is a province located in the CALABARZON , just 16 kilometers east of Manila. The province was named after the country's national hero, José Rizal. Rizal Governor Casimiro A. Ynares III on June 17, 2008 announced the transfer of the Capitol from Pasig. Its P 270-million capitol building,...
and Cavite
Cavite
Cavite is a province of the Philippines located on the southern shores of Manila Bay in the CALABARZON region in Luzon, just 30 kilometers south of Manila. Cavite is surrounded by Laguna to the east, Metro Manila to the northeast, and Batangas to the south...
; parts of the provinces of Laguna, Quezon
Quezon
-History:Originally, what now forms Quezon was divided among the provinces of Batangas, Laguna, and Nueva Ecija. The area was first explored by Juan de Salcedo in 1571-1572, during his expedition from Laguna to Camarines provinces....
and Batangas
Batangas
Batangas is a first class province of the Philippines located on the southwestern part of Luzon in the CALABARZON region. Its capital is Batangas City and it is bordered by the provinces of Cavite and Laguna to the north and Quezon to the east. Across the Verde Island Passages to the south is the...
; and 17 barangays in Pampanga
Pampanga
Pampanga is a province of the Philippines located in the Central Luzon region. Its capital is the City of San Fernando, Pampanga. Pampanga is bordered by the provinces of Bataan and Zambales to the west, Tarlac and Nueva Ecija to the north, and Bulacan to the southeast...
. Meralco's franchise area produces 49 percent of the country's gross domestic product, with 32 percent in Metro Manila alone.
First Philippine Electric Corporation (First Philec) is the holding company for all of its manufacturing businesses such as dry-type transformers and silicon wafer-slicing. First Philippine Industrial Park (FPIP) is the only Integrated Management System certified industrial park in the Philippines while Rockwell Land Corporation (Rockwell) is the first property firm in the country to develop a complete, high-end, inner-city community.
First Holdings maintains its corporate headquarters at the 4th floor of the Benpres Building in Ortigas Center
Ortigas Center
Ortigas Center is Metro Manila's second most important Philippine financial district-cum-central business district after the Makati Financial and Central Business District in Makati City. With an area of at least 100 hectares, the district is located at the boundaries of Pasig City, Mandaluyong...
at Pasig City
Pasig City
The City of Pasig is one of the city municipalities of Metro Manila in the Philippines and was the former capital of the province of Rizal prior to the formation of this grouping of cities designated as the National Capital Region...
, Philippines.
The founder
In the 1950s, then-President Carlos GarciaCarlos P. Garcia
Carlos Polistico García was a Filipino teacher, poet, orator, lawyer, public official, political economist and guerrilla leader...
pushed for a larger Filipino role in the nation's economic activities. Indeed, the next decade witnessed the flowering of Filipino entrepreneurial spirit. Among the many Filipino entrepreneurs whose businesses flourished in this period was Don Eugenio Lopez Sr. (Don Eugenio), an entrepreneurial and visionary businessman who would soon establish a conglomerate that would become First Philippine Holdings Corporation.
Lopez graduated from the Ateneo de Manila University
Ateneo de Manila University
The Ateneo de Manila University is a private teaching and research university run by the Society of Jesus in the Philippines. It began in 1859 when the City of Manila handed control of the Escuela Municipal de Manila in Intramuros, Manila, to the Jesuits...
in 1919, with an AB Degree, Cum Laude. He went on to study law in the University of the Philippines
University of the Philippines
The ' is the national university of the Philippines. Founded in 1908 through Act No...
and after passing the bar exams, he underwent a year of post graduate studies in law at Harvard University
Harvard University
Harvard University is a private Ivy League university located in Cambridge, Massachusetts, United States, established in 1636 by the Massachusetts legislature. Harvard is the oldest institution of higher learning in the United States and the first corporation chartered in the country...
.
Lopez had various businesses. In 1932, he established the Iloilo Negros Air Express Company. He also made his mark in sugar milling, with the acquisition of the Binalbagan-Isabela Sugar Company (BISCOM). He was a power in media, owning The Manila Chronicle newspaper and ABS-CBN Broadcasting Corporation, the Philippines' largest media conglomerate. He was also one of the founders of the Philippine Commercial and Industrial Bank (PCI Bank).
But in 1962, he bought the biggest company in the Philippines, Meralco.
The first decade (1961–1970)
Meralco was so large that many Filipino businessmen believed that its acquisition by a Filipino was nearly impossible. By 1960, Meralco was worth $66 million and served more than 360,000 customers. In 1961, Fortune MagazineFortune (magazine)
Fortune is a global business magazine published by Time Inc. Founded by Henry Luce in 1930, the publishing business, consisting of Time, Life, Fortune, and Sports Illustrated, grew to become Time Warner. In turn, AOL grew as it acquired Time Warner in 2000 when Time Warner was the world's largest...
cited that the company's operations and equipment were comparable to the best US power firms.
But although Meralco was a stable and highly profitable enterprise, the government's decree of pushing for more Filipino participation in the business prodded General Public Utilities (GPU) president Albert F. Tegen, to find a buyer for the company. Tegen approached a number of the leaders in the Manila's business community, including the Araneta-Zobel group, which balked at buying only 5% of the company.
Eventually the key people involved in the buyout of the company – Tegen and Roberto T. Villanueva, BISCOM's Chairman of the Board, crossed paths in New York. Villanueva was pursuing the owners of Victorias Milling Company, a Negros-based sugar company, to make an offer for their firm. However, the owners remained unwilling to sell.
Knowing that Villanueva was instrumental in the successful Filipino buyout of several companies, Tegen asked him to explore the possibility of the Lopez Group buying Meralco.
Even Lopez knew how risky the Meralco deal would be, for none of his previous business acquisitions amounted to its sale price. Buying Meralco and running it well required tremendous capital, managerial talent, and personal focus. But Don Eugenio was a visionary - he recognized the opportunities in the power industry.
Two syndicate of banks were established to handle this big transaction - one was a US Bank headed by Citibank
Citibank
Citibank, a major international bank, is the consumer banking arm of financial services giant Citigroup. Citibank was founded in 1812 as the City Bank of New York, later First National City Bank of New York...
and another local bank headed by PCI Bank. The Lopez Group paid a 10% down payment and the balance was paid over a 10-year period.
So on June 8, 1961 Tegen and Villanueva signed a preliminary agreement between GPU and the Lopez Group. Lopez needed a new corporate entity to take over the Meralco assets. Two days after, Meralco Securities Corporation (MSC) was established. It was principally organized to acquire ownership of the Manila Electric Company and manage its business. In the years that followed, MSC went beyond being an acquisition and management tool for Meralco – it also became an important company in its own right.
Initially, its capital stock was at Php 450M and the number of initial stakeholders was 605. Its 14 initial incorporators comprised some of the brightest businessmen at that time: Rafael Anton, Salvador Araneta, Antonio Delgado, Senen Gabaldon, Emilio Gonzales La'O, Ricardo Ledesma, Eugenio Lopez, Eugenio Lopez, Jr.
Eugenio Lopez, Jr.
Eugenio Lopez, Jr. , popularly known as Geny and Kapitan, was the Chairman Emeritus of ABS-CBN Broadcasting Corporation.-Early life and career:...
(Geny), Alfredo Montelibano, Ernesto Oppen, Jr., Ernesto Rufino, Sr., Jose Soriano, Dolores De Tuazon, and Roberto Villanueva.
For the first few years, MSC had no independent life; its fate was tied to the success of Meralco. Because it was primarily focused on acquiring Meralco, it was virtually unknown. But after 1966, MSC's time to shine came.
Up to 1962, Meralco was greatly dependent on the National Power Corporation
National Power Corporation
The National Power Corporation , also known as the NPC or Napocor, is a state-owned company that serves as the largest provider and generator of electricity in the Philippines...
(NAPOCOR) for 35% of its power requirements. While NAPOCOR had a program for expansion, the program was delayed and it took them more than two years to put up a power plant
Power station
A power station is an industrial facility for the generation of electric energy....
. It built a new power plant every 18 months, and expanded its generating capacity fivefold, from 300,000 kW to 1.5 million kW in 10 years. At this time, Meralco's rates were among the lowest in the world.
The second decade (1971–1980)
MSC's management had two main goals in mind: to pay for the buy out of Meralco and run it far better than it had been before. Lopez recruited Filipino managers, such as Meralco Chief Finance Officer Vicente Paterno, Antonio Ozaeta and Christian MonsodCommission on Elections (Philippines)
The Commission on Elections, or COMELEC, is one of the three constitutional commissions of the Philippines. Its principal role is to enforce all laws and regulations relative to the conduct of elections, initiatives, referendums, and recalls....
, while retaining some of the American managers like Lee Garner, Russ Swartley and Steve Psinakis. Eventually, most of these managers headed various local and multinational corporations.
By 1966, its initial financial pressures were beginning to ease. Paterno's success in tapping new funds from international capital markets freed the company from major financial worries for at least the next four years. In late 1966, Meralco shareholders received dividends for the first time. In the same year, Don Eugenio created a Department of Economic Research and Development headed by his son, Oscar M. Lopez. Together with Ernesto "Ernest" Rufino, Jr., Oscar sought to make MSC as broad as possible. Their efforts focused on the following areas: expanding the Meralco franchise area, computer services, construction, banking, and financial services.
Oscar and Ernest saw the need to bring fuel from Batangas
Batangas
Batangas is a first class province of the Philippines located on the southwestern part of Luzon in the CALABARZON region. Its capital is Batangas City and it is bordered by the provinces of Cavite and Laguna to the north and Quezon to the east. Across the Verde Island Passages to the south is the...
to Sucat
Parañaque City
The City of Parañaque , or simply Parañaque , is one of the cities and municipalities that make up Metro Manila in the Philippines....
in the cheapest possible way. As a result, MSC created the first commercial pipeline in the country. The pipeline transported bunker oil to Meralco power plants. Even oil companies such as Pilipinas Shell
Royal Dutch Shell
Royal Dutch Shell plc , commonly known as Shell, is a global oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the fifth-largest company in the world according to a composite measure by Forbes magazine and one of the six...
and Caltex
Caltex
Caltex is a petroleum brand name of Chevron Corporation used in more than 60 countries in the Asia-Pacific region, the Middle East, and southern Africa.-History:...
needed to transport white oil
White oil
White oil is a home made insecticide spray used for controlling a wide range of insect pests in the garden. The spray works by blocking the breathing pores of insects causing suffocation and death...
products more efficiently from Batangas to other oil depot
Oil depot
An oil depot is an industrial facility for the storage of oil and/or petrochemical products and from which these products are usually transported to end users or further storage facilities...
s, as they were still using barges and trucks. Thus, two pipelines were created. One transported black oil
Black Oil
Black Oil may refer to:* Black Oil , an alien virus in the X-Files episode The Colonist* a sunflower variety...
products which included bunker fuel and crude oil, and the other ferried white oil products such as gasoline, diesel, and LPG. This new company, called Meralco Securities Industrial Corporation, was created on March 31, 1967. It was later renamed as First Philippine Industrial Corporation (FPIC).
Aside from the pipeline industry, MSC created Philec and many other subsidiaries.
But during the term of then-President Ferdinand Marcos
Ferdinand Marcos
Ferdinand Emmanuel Edralin Marcos, Sr. was a Filipino leader and an authoritarian President of the Philippines from 1965 to 1986. He was a lawyer, member of the Philippine House of Representatives and a member of the Philippine Senate...
in 1970, the Philippines was confronted with its worst economic crisis
Financial crisis
The term financial crisis is applied broadly to a variety of situations in which some financial institutions or assets suddenly lose a large part of their value. In the 19th and early 20th centuries, many financial crises were associated with banking panics, and many recessions coincided with these...
which stemmed from economic mismanagement
Financial mismanagement
Financial mismanagement is management that, deliberately or not, is handled in a way that can be characterized as "wrong, bad, careless, inefficient or incompetent" and that will reflect negatively upon the financial standing of a business or individual....
, affected the government's ballooning debt, the peso
Philippine peso
The peso is the currency of the Philippines. It is subdivided into 100 centavos . Before 1967, the language used on the banknotes and coins was English and so "peso" was the name used...
devaluation, and other factors. The crisis lasted for 25 years and Meralco, the cornerstone of the MSC conglomerate, was the hardest hit. The annual increase in electricity demand was anemic while the company's net income dropped from Php 62.2M in 1969 to Php 10.3M in 1971.
It was not only the financial crisis that challenged Meralco. At that time, the Philippines was also plunging deeper into a political crisis. While Philippine society was modernizing and becoming more diverse, politics was becoming increasingly polarized between the conservative elite and emergent forces calling for political, social, and economic change.
Public discontent with the administration grew from alleged issues of corruption and human rights violation. Consecutive protests took place – showing the Filipinos' grievances over the social injustices they were witnessing. This was what later became known as the First Quarter Storm
First Quarter Storm
The First Quarter Storm was a period of leftist unrest in the Philippines, composed of a series of heavy demonstrations, protests, and marches against the government from January to March 1970, or the first quarter of 1970...
.
On September 21, 1972, President Ferdinand Marcos issued Proclamation No. 1081
Proclamation No. 1081
Proclamation No. 1081 was the declaration of martial law in the Philippines by President Ferdinand E. Marcos. Once in effect, it covered the entire republic on September 21, 1972...
, placing the entire country under martial law. Along with this, he also issued Letter of Instruction 2 which instructed the military to take over all public utilities such as Philippine Long Distance Telephone Company
Philippine Long Distance Telephone Company
The Philippine Long Distance Telephone Company commonly known as PLDT, is the largest telecommunications company in the Philippines. PLDT is also the largest company in the Philippines, ranked 1138th in the April 2009 update, and 1080th in the April 2010 update, of Forbes' Global 2000 list...
and Meralco. And shortly after the midnight of September 22, elements of the 51st Army Engineering Brigade entered the Meralco compound and took over the power company.
The Marcos regime used various tactics to force Don Eugenio to hand over his controlling stake in MSC and Meralco to the dictator and his cronies. Two of which included a government-imposed cut in power rates and the imprisonment of Geny, his eldest son, on trumped-up charges.
Under duress and with fear of not seeing his son Geny set free, Don Eugenio was forced to sign an agreement on November 29, 1973, ceding ownership of MSC to Benjamin "Kokoy" Romualdez, brother of First Lady Imelda Marcos
Imelda Marcos
Imelda R. Marcos is a Filipino politician and widow of 10th Philippine President Ferdinand Marcos. Upon the ascension of her husband to political power, she held various positions to the government until 1986...
and an alleged Marcos bagman. Despite this, Marcos reneged on his promise to set Geny free even until Don Eugenio's death on July 6, 1975 in San Francisco, USA.
In 1978, MSC was renamed First Philippine Holdings Corporation. First Holdings went on a huge expansion program, which included the acquisition of 25% of Pilipinas Shell. First Holdings also organized another wholly owned subsidiary, First Holdings International (FHI), to coordinate the overseas activities of Engineering and Construction Corporation of Asia and the Pacific Engineering Company, Inc. The establishment of FHI positioned the company for expanding its contracting and project management services abroad, particularly in the Middle East, which was then regarded as the primary source of profitable undertakings.
But the magnitude of its investments and the unfavorable conditions in the financial market, led to the near-collapse of First Holdings by the mid-1980s. The country was experiencing a prolonged recession in the second half of 1983. The country's fall-out resulting from the assassination of Senator Benigno S. Aquino
Benigno Aquino, Sr.
Benigno Simeon Aquino, Sr. , also known as Benigno S. Aquino or Benigno S. Aquino, Sr., was a Filipino politician who served as Speaker of the Second Philippine Republic National Assembly from 1943 to 1944....
spared no one. Massive capital flight of international investors immediately followed. Almost overnight, credit from both foreign and local sources dried up. Forcing bankruptcy, management of corporate debt became a major concern of the company. To eliminate its debt, First Holdings sold its equity in Pilipinas Shell Petroleum Corporation while First Holdings Center in Makati
Makati City
The City of Makati is one of the 17 cities that make up Metro Manila, one of the most populous metropolitan areas in the world. Makati is the financial center of the Philippines and one of the major financial, commercial and economic hubs in Asia...
was sold to a group of banks.
Amidst divestment of assets and scaled down activities, the company suffered years of consolidated net losses. In 1985, this situation was further aggravated with the termination of its sub-contract for the Hail electrification project in Saudi Arabia
Saudi Arabia
The Kingdom of Saudi Arabia , commonly known in British English as Saudi Arabia and in Arabic as as-Sa‘ūdiyyah , is the largest state in Western Asia by land area, constituting the bulk of the Arabian Peninsula, and the second-largest in the Arab World...
.
With the national economy in ruins and failure of the electoral process, calls for reform were coming from the local and foreign community. President Marcos was hounded by pressure from many sides – an increasingly restive people, a rapidly failing economy, growing doubts by foreign creditors, a hostile international press, and unbridled corruption of his closest allies.
With the economy in ruins and increasing pressure, both internal and external, Marcos called for "snap" elections
Philippine presidential election, 1986
The Presidential and Vice-Presidential snap elections were held on February 7, 1986 in the Philippines.-Background:President Ferdinand E...
. What was once an unruly and fractious opposition came together in time to put up one presidential candidate, Corazon "Cory" Aquino
Corazon Aquino
Maria Corazon Sumulong Cojuangco-Aquino was the 11th President of the Philippines and the first woman to hold that office in Philippine history. She is best remembered for leading the 1986 People Power Revolution, which toppled Ferdinand Marcos and restored democracy in the Philippines...
, widow of Ninoy. The election took place with international media representatives and invited observers of foreign governments covering the event. Many Filipinos volunteered as poll watchers – guarding the ballot boxes with their life. Such courage, however, did not prevent the widespread fraud and terrorism which caused the failure of the electoral process.
Subsequently, members of the military, led by the Minister of National Defense and the Vice Chief of Staff of the Armed Forces
Armed Forces of the Philippines
The Armed Forces of the Philippines is composed of the Philippine Army, Philippine Navy and Philippine Air Force...
broke with President Marcos and announced their support for Corazon Aquino, whom they regarded as the duly elected president of the Philippines. Filipinos from all walks of life gathered together – giving birth to the historic EDSA revolution. The dark days of dictatorship had ended and democracy was reborn. For First Holdings, these turn of events eventually made its rehabilitation possible.
The third decade (1981–1990)
After the EDSA Revolution, the Lopezes regained control of First Holdings. Oscar Lopez took the helm of a battered company, which was nearly bankrupt with over Php 1.2 billion in debt.But it was not only the parent company which needed rehabilitation. Even its subsidiaries had to get moving. There were two principle tasks which had to be done: generating more cash flow and a respectable rate of return for the stockholders. Both of these turned out to be considerable challenges, but the people in First Holdings took them one step at a time - and they prevailed.
After one year, the company was able to reschedule and rearrange most of its debt load by selling some assets. It also began the long process of reacquiring part of its stake in Meralco. And in 1990, the company made its first profit since 1983 of Php 28 million.
The fourth decade (1991–2000)
In 1992, First Holdings re-entered the power generation business through the building of a 225 MW diesel plant under Bauang Private Power Corporation (Bauang Power). At that time, Bauang Power held several distinctions: it was the only predominantly Filipino-owned fast track power plant in the country to offer the cheapest power among many fast track plants, the largest medium-diesel plant in the world, and the fastest commissioning for a plant of its type in the world.It diversified into more businesses and opened new plants. The company took part in developing the Malampaya Project
Philippine National Oil Company
Philippines National Oil Company, owners of 40% stake in Petron, is a Philippines state owned company.On April 25 2008, Gloria Macapagal-Arroyo appointed former Negros Oriental 1st district congressman Jacinto "Jing" Paras as chairman of its subsidiary, the Philippine National Oil Company -...
, the largest and most significant industrial investment in the history of the Philippines which signals the birth of the country's natural gas
Natural gas
Natural gas is a naturally occurring gas mixture consisting primarily of methane, typically with 0–20% higher hydrocarbons . It is found associated with other hydrocarbon fuel, in coal beds, as methane clathrates, and is an important fuel source and a major feedstock for fertilizers.Most natural...
industry. In partnership with British Gas plc
British Gas plc
British Gas plc was formerly the monopoly gas supplier and is a private sector in the United Kingdom.- History :In the early 1900s the gas market in the United Kingdom was mainly run by county councils and small private firms...
, First Holdings created First Gas Corporation Holdings to build and run the first gas-fired combined-cycle gas turbine power plants in the country. Under First Gas are the 1,000 MW Sta. Rita and 500 MW San Lorenzo power plants, both located in Batangas.
This decade also marked the company's entry into infrastructure with the development of the North Luzon Expressway
North Luzon Expressway
The North Luzon Expressway , and which is formerly called the North Diversion Road, and officially known as Radial Road 8 is a 4 to 8-lane limited-access toll expressway that connects Metro Manila to the provinces of the Central Luzon region in the Philippines...
(NLEX), an 84-kilometer world-class highway – the longest toll road in the country in terms of lane-kilometers.
Responding to the government's call for a private sector to invest in the NLEX project, the Lopez Group took up the challenge of mobilizing funds and mustering managerial expertise.
In 1994, the First Philippine Infrastructure Development Corporation (FPIDC) was formed to enter into partnership with the Philippine National Construction Corporation
Philippine National Construction Corporation
The Philippine National Construction Corporation or PNCC is a majority government-owned and/or controlled corporation in the Philippines. It is the largest construction company in the Philippines and in Southeast Asia....
for the NLEX project. FPIDC incorporated the Manila North Tollways Corporation (MNTC) in February 1997 as the operating company for the NLEX project. The other stockholders are EGIS Projects S.A. of France, Leighton Contractors Asia Limited
Leighton Holdings
Leighton Holdings is Australia's largest project development and contracting group. It is active in the telecommunications, engineering and infrastructure, building and property, mining and resources, and environmental services industries...
of the publicly listed Australia Exchange
Australian Securities Exchange
The Australian Securities Exchange was created by the merger of the Australian Stock Exchange and the Sydney Futures Exchange in July 2006. It is the primary stock exchange group in Australia....
, and the Leighton Group of Australia.
The beginnings of the fifth decade (2001-present)
First Holdings has gained recognition for the substantial investments it made in industrial parks, property development, and manufacturing. In 2001, the MNTC financing structure was recognized as the "Asia-Pacific Transport Deal of the Year 2001" by the Project Finance magazine, published by the EuromoneyEuromoney (magazine)
Euromoney magazine, a monthly periodical, is the flagship publication of business and financial publisher Euromoney Institutional Investor....
of London. Indeed, the NLEX project took pride in its being the first project financed toll road undertaking in the country and also the first project to achieve financial close outside the power sector despite the global economic crisis.
The company also won the bid for the Subic-Clark-Tarlac Expressway
Subic-Clark-Tarlac Expressway
The Subic-Clark-Tarlac Expressway is a four-lane expressway north of Manila, in the Philippines. Its southern terminus is at the Subic Bay Freeport Zone in Zambales, it passes through the interchange with the North Luzon Expressway near the Clark Special Economic Zone in Angeles City, and its...
(SCTEX) in 2007. SCTEX links three prime economic zones in Central Luzon: Subic Bay Freeport and Special Economic Zone
Subic Bay Metropolitan Authority
The Subic Bay Freeport or what was the former US Naval facility in Subic Bay into a self-sustaining tourism, industrial, commercial, financial, and investment center to generate employment opportunities .-History:...
, Clark Special Economic Zone
Clark Freeport Zone
Clark Freeport Zone is a redevelopment of the former Clark Air Base, a former United States Air Force base in the Philippines. It is located on the northwest side of Angeles City and borders the municipality of Mabalacat in the province of Pampanga. It is located about 40 miles northwest of...
, and Central Techno Park.
However, in 2008, First Holdings sold its toll road business to Metro Pacific Investment Corporation
North Luzon Expressway
The North Luzon Expressway , and which is formerly called the North Diversion Road, and officially known as Radial Road 8 is a 4 to 8-lane limited-access toll expressway that connects Metro Manila to the provinces of the Central Luzon region in the Philippines...
, a company with interests in real estate, utilities, and shipping.
In November 2006, First Gen won the bid to acquire the 112 MW Pantabangan-Masiway hydroelectric power plant complex from the Power Sector Assets & Liabilities Management. The following year, First Gen acquired a 60% economic interest in Philippine National Oil Company – Energy Development Corporation (EDC). EDC was established in 1976, to wean the country from its dependence on imported fuels by developing renewable sources of energy
Renewable energy
Renewable energy is energy which comes from natural resources such as sunlight, wind, rain, tides, and geothermal heat, which are renewable . About 16% of global final energy consumption comes from renewables, with 10% coming from traditional biomass, which is mainly used for heating, and 3.4% from...
. It is an acknowledged global leader in wet steam field technology and is primarily engaged in the exploration, development, and optimization of geothermal fields
Geothermal power
Geothermal energy is thermal energy generated and stored in the Earth. Thermal energy is the energy that determines the temperature of matter. Earth's geothermal energy originates from the original formation of the planet and from radioactive decay of minerals...
.
Also, in 2008, the first large-scale silicon wafer-slicing plant was inaugurated in the Philippines – First Philec Solar Corp. This subsidiary, a joint venture between First Holdings and the Sunpower of the United States, aims to develop the solar energy industry in the Philippines and to compete with companies providing wafer-slicing services in China, Japan, and Germany.
The Philippines was not spared from the global financial crunch of 2008, and so was First Holdings. While the company enjoyed a favorable business climate in the past years, it was affected with the economic crisis. Currency movements, high finance costs, and other factors caused First Holdings to sell 20 percent of its ownership in Meralco to Philippine Long Distance Telephone Company
Philippine Long Distance Telephone Company
The Philippine Long Distance Telephone Company commonly known as PLDT, is the largest telecommunications company in the Philippines. PLDT is also the largest company in the Philippines, ranked 1138th in the April 2009 update, and 1080th in the April 2010 update, of Forbes' Global 2000 list...
(PLDT).
In spite of the challenging year, First Holdings and its subsidiaries reaped a number of achievements from various groups. The parent company received an Integrated Management Systems (IMS) certification for its adherence to quality standards and a gold award for corporate governance
Corporate governance
Corporate governance is a number of processes, customs, policies, laws, and institutions which have impact on the way a company is controlled...
.
First Gas Power Corporation also won the 2008 "Asia Pacific Refinancing Deal of the Year" award from ProjectFinance magazine. The company earned its award for its successful completion of a US$544-million refinancing agreement with nine large foreign banks. According to ProjectFinance Magazine, the deal was a "major achievement" because it was finalized "at a time when lack of liquidity, a spike in labor rates and unwillingness to lend long term had frozen the debt market"
The Lopez way
First Holdings' strategic vision is anchored on the values which have been passed on from Don Eugenio to the current Lopez generation.More so, Oscar believed that the success of the Lopez family and their companies owed more to the intangibles of management: values, vision, and leadership. They have ingrained corporate values that go beyond the mere earning of profits. These core values have sustained them through the many difficult times of the past.
Management and employees
First Holdings' commitment to its stockholders is also reflected in its commitment to its employees. Its employees have compensations and benefits considered among the best in the Philippines. Frequent training and career development programs raise levels of competence, develop positive work values, and prepare employees for productive careers. First Holdings' management consists of a talented and committed management team – people of experience and vision who are instrumental to the success of the company. To further hone and expand their capabilities, First Holdings sends its managers to attend post-graduate programs and courses at the Asian Institute of ManagementAsian Institute of Management
The Asian Institute of Management, or simply AIM, is a graduate school of business and a center of business and management research. It is one of the few business schools in Asia to be internationally accredited with the AACSB. It was established in partnership with Harvard Business School and uses...
as well as other educational institutions.
Don Eugenio believed that a company's greatest asset was its people, and that they should be nurtured accordingly. He was known for his fairness and generosity to its employees. This principle is seconded by Oscar who also believes that a company is only as strong as its people.
First Holdings claims that the total compensation of their employees is over and above industry standards and considered as one of the best benefit packages in the country. Apart from this, employees are empowered to make decisions within their sphere of influence. The employees' personal and professional development are nurtured through the Training & Development opportunities like the Executive Masters in Business Administration and the managerial leadership programs of the Asian Institute of Management are offered and open to its employees.
Each of First Holdings' subsidiaries has its own Human Resources departments and systems, but the parent company handles the talent management of the executives who are deployed in various subsidiaries as seconded employees.
The HR departments of the First Holdings Group are part of the Lopez Group HR Council, where they discuss and exchange their best practices in the group.
First Holdings uses the Malcolm Baldrige Criteria
Malcolm Baldrige National Quality Award
The Malcolm Baldrige National Quality Award recognizes U.S. organizations in the business, health care, education, and nonprofit sectors for performance excellence. The Baldrige Award is the only formal recognition of the performance excellence of both public and private U.S. organizations given by...
to cover both its corporate initiatives and corporate social responsibility.
Corporate governance
First Holdings was among eight companies that received a gold award (a rating between 95 to 99%) for garnering the highest ratings, among 169 publicly listed companies, in the 2008 Corporate Governance Scorecard Project (CG-Sc), conducted by the Institute of Corporate Directors (ICD), Philippine Stock Exchange and Securities and Exchange Commission.Corporate initiatives
First Holdings has adopted a manual on Corporate Governance, Corporate Code of Conduct, and Manual on Anti-Money Laundering.The company's corporate governance has been entrusted to the board of directors. To ensure that independent, objective, and reasoned views are part of its board deliberations, First Holdings has more than what the law mandates of having at least 2 independent directors or at least 20 percent of a company's board membership. To date, the company has five existing independent directors.
In 2009, First Holdings marked two milestones in the company's corporate history.
First, it achieved triple certification when it successfully passed the audits for the ISO 9001, 14001, and OHSAS 18001 standards. It is the only holding company in the Philippines to receive an IMS certification from Certification International.
Second, it received a gold award from the ICD for its commitment to good corporate governance. First Holdings was among only eight companies who received a gold award (a rating between 95 to 99%) for garnering the highest ratings, among 169 publicly listed companies, in the 2008 CG-Sc, jointly conducted by the ICD, Philippine Stock Exchange
Philippine Stock Exchange
The Philippine Stock Exchange is the national stock exchange of the Philippines. It is one of the oldest stock exchanges in Southeast Asia, having been in continuous operation since its inception in 1927...
and Securities and Exchange Commission.
The corporate initiatives also include standards based systems, management tools, and recognition awards. Part of its management tools include the environment, safety, and health programs (ESH) and the Six Sigma program. The prominent standards systems in use are ISO 9001, ISO 14001 and OHSAS 18001.
Meanwhile, ESH started in 1998 as a corporate initiative for companies in the First Holdings Group which was eventually rolled out for the whole Lopez Group.
Corporate social responsibility
Even before the term corporate social responsibilityCorporate social responsibility
Corporate social responsibility is a form of corporate self-regulation integrated into a business model...
began to be used in the Philippines, it had long been practiced by the Lopez Group of companies, like First Holdings. Don Eugenio called for his businesses to continually contribute to the betterment of society.
He even believed that a commercial firm which gives service and real satisfaction to the community, may be more successful than a multi-million corporation which reaps huge profits and then keeps them to itself.
The company's social responsibility programs provide employees with opportunities to help the general public and fulfill their individual interests to be of value to the society. They are inspired to give their time, energy, and resources to help. In this manner, employees are brought together to carry out regular activities to build stronger and closer relations with its local community.
Oscar Lopez also believes that a substantial proportion of the company's earnings should be returned to the people in form of foundations, grants, scholarships, hospitals, and many other forms of social benefits. His concern for the environment found concrete expression in the creation of First Philippine Conservation Inc. (FPCI), which supports the work of Conservation International
Conservation International
Conservation International is a nonprofit organization headquartered in Arlington, Virginia, which seeks to ensure the health of humanity by protecting Earth's ecosystems and biodiversity. CI’s work focuses on six key initiatives that affect human well-being: climate, food security, freshwater...
(CI) in protecting Philippine biodiversity.
Today, FPCI works to protect the country's largest remaining block of old-growth rain forest in Sierra Madre range
Sierra Madre (Philippines)
The Sierra Madre is a mountain range in The Philippines. It is located along the north-eastern coast of Luzon Island, running north/south. Quezon National Forest Park is situated in the range.-Geography:...
and currently implements the Verde Passage Integrated Conservation and Development in partnership with the CI and First Gas Corp.
Oscar's longstanding concern for eye care led him to create the Asian Eye Institute, a world-class eye care center in Rockwell and donate a mobile eye clinic to the Ophthalmological Foundation of the Philippines.
Wellness
First Holdings also aggressively supports a corporate-wide Lifelong Wellness system that holistically develops employees' body, mind and spirit.Oscar M. Lopez has enunciated a policy making employee wellness a priority. An Executive Recharging and Training Program was developed in 1998 and evolved into Corporate Wellness program which is now known as Lopez Lifelong Wellness (LLW).
LLW's goal is to help employees and their families develop a healthy lifestyle that, through voluntary behavioral changes, reduces health risks and maximizes the employee's potential. LLW activities include an annual three-day wellness seminar for all employees, learning sessions, fitness exercises and team-building activities.
Major investments
First Holdings has core investments in power generation and distribution, as well as infrastructure, with strategic investments in manufacturing and property.Power generation
First Holdings, through First Gen Corporation, has investments in gas-fired, bunker-fired, hydroelectric and geothermal power generation plants.Subsidiaries
- First Gen Corporation, is the largest vertically integrated power generation company in the Philippines today. It has an installed capacity of 2,582 MW, representing 17% of the country's total installed capacity. First Holdings has a 67% stake in First Gen.
- First Gas Holdings Corporation manages all the gas power projects of First Gen. Currently, it has two power projects: the 1000 MW Santa Rita project and the 500 MW San Lorenzo Combined Cycle Gas Turbine Power project, both of which are located at Sta. Rita Batangas. These two projects form part of the Malampaya Gas-to-Power Project, a program that calls for the supply of natural gas to combined cycle power plants with an aggregate capacity of 3,000 MW.
- Energy Development Corporation (EDC) is the largest geothermal producer in the Philippines and the second largest in the world. Today, it accounts for more than 60% of the installed geothermal capacity in the Philippines. Its steam fields are located in the provinces of Leyte, Negros Oriental, Bicol, and North Cotabato. EDC recently bought 60% of FGHPC.
- First Gen Hydro Power Corporation is the operating entity of the 112 MW Pantabangan – Masiway Hyrdro-Electric Power Plants. Through FGPHC, First Gen participated in the Wholesale Electricity Spot Market, where it became the largest non-government electricity trader.
- First Private Power Corporation (FPPC) owns 93.25% of the Bauang Private Power Corp. which operates the 225 MW bunker-fired diesel-engine Bauang Power Plant in La Union. Other FPPC shareholders are Meralco and JG Summit, Inc.
- First Gen Renewables (FGRI) (formerly First Philippine Energy Corp.) is the wholly owned renewables energy subsidiary of First Gen. FGRI owns FG Bukidnon Power Corp, which operates the 1.6 MW Agusan mini-hydro power plant in Damilag, Manolo Fortich, Bukidnon. FGRI uses energy technologies such as solar, wind, and mini-hydro.
Power distribution
First Holdings has core investments in power distribution through Manila Electric Company and Panay Electric Company.Subsidiaries
- The Manila Electric Company (Meralco) is the country's largest electricity distributor and is one of the top 5 corporations in the Philippines. It marked its 105th year of service in 2008.
- Panay Electric Company (PECO) – Established in 1923, PECO is one of the oldest private electricity distribution utilities in the Philippines. Today, it remains to be the only private electric distributor in the whole island of Panay.
Infrastructure
First Holdings has investments in infrastructure. First Philippine Industrial Corporation is First Holdings' subsidiary engaged in pipeline services. Another subsidiary, First Balfour, Inc., is a construction company.Subsidiaries
- FPIC owns and operates the largest and only commercial oil pipeline in the country, transporting crude and refined petroleum products from Batangas to Metro Manila. It was established in 1967 to service the fuel requirements of Meralco and the oil refineries in Batangas.
- First Balfour is one of the country's largest engineering and construction companies today, with over 35 years of construction experience. The company focuses on civil, mechanical and electrical works for road and bridge construction, residential and industrial buildings and plants, water supply and treatment plants, power plants, power transmission, and power distribution.
Manufacturing
First Holdings has strategic investments in manufacturing under First Philec Corporation.Under First Philec, the Electricals Division support electric utilities and comprises Philippine Electric Corporation, First Electro Dynamics Corporation, and First Philippine Power Systems, Inc. The Electronics Division, through First Sumiden Circuits, First Philec Solar Corporation, and First Sumiden Realty, continues to provide much-needed employment and foreign exchange.
Subsidiaries
- First Philippine Electric Corporation is First Holdings' vehicle for growth in electrical and electronics manufacturing and services. Its business focus is on electrical and electronics manufacturing and services, leveraging the market, technology and operational strengths of the Group's existing manufacturing concerns.
- Philec is the country's pioneer manufacturer of distribution and power transformers. Established in 1969, it began its commercial operations under a technical and licensing agreement with Hitachi Ltd. of Japan, manufacturing distribution transformers.
- First Electro Dynamics Corporation (FEDCOR) is the country's largest service center for distribution and power transformers, and other distribution line equipment. It also provides maintenance services for substations and other electrical installations. FEDCOR also has the capability to manufacture distribution transformers and current transformers in conformance to international standards.
- First Philippine Power Systems (FPPS) started commercial operations in July 2006. It was established to primarily serve the dry-type transformer requirements of American Power Conversion, the world's leading manufacturer of large, uninterruptible power supply units. FPPS manufactures low-voltage, dry-type transformers for the industrial and original equipment manufacturer market.
- First Philec Manufacturing Technologies Corporation started commercial operations in July 2006.
- First Sumiden Circuits, Inc. (FSCI) is a joint venture among world class manufacturers Sumitomo Electric Industries, Inc. (51%), First Holdings (40%) and Sumitomo Corporation (9%). FSCI is the pioneer manufacturer of high quality flexible printed circuits: thin and light weight wiring components with electronic circuits printed on flexible film. These are applied on hard disk drives, optical disk drives, mobile phones, pagers, cameras, car stereos and other items. Its customers include world renowned brands such as Fujitsu, Hitachi, IBM, Sony and Toshiba.
- First Philec Solar Corporation is the newest joint venture between First Philec and SunPower Philippines Manufacturing Ltd. This project is the first large-scale silicon wafer-slicing company in the Philippines. SunPower designs, manufactures and delivers the highest efficiency solar electric technology in the world today.
Property
First Holdings has strategic investments in property through Rockwell Land Corporation and First Philippine Industrial Park.Subsidiary
Rockwell Land Corporation is a real estate development company initially tasked to develop Rockwell Center, a 15.5 hectare prime residential and commercial property located in Makati City near the Central Business District.The Rockwell Center used to be the site of the Meralco-owned 130 MW Rockwell Thermal plant named after James Chapman Rockwell, Meralco's 2nd and 4th president.
Other subsidiary
FPIP is a 315-hectare, modern industrial estate. It caters to wide range of industries such as light and medium manufacturing for export as well as the domestic market, high technology and non-pollutive industries and IT.Other subsidiaries
- Asian Eye Institute (AEI) is an eye care center. Established in 2001, AIE has served over 50, 000 patients, and is at the forefront of efforts to make available in Asia breakthrough technologies for eye care and treatment.
AEI has two satellite clinics located in Ayala's Trinoma Mall and SM Mall of Asia.
- Securities Transfers Services, Inc. (STSI) – a securities and stock transfer company.
Further reading
- Añonuevo, E. P. (2008) First Philec set to serve solar energy industry, inaugurates wafer-slicing plant Retrieved January 5, 2008
- Colayaco, M.T. (1991). The cornerstone: The story of the First Philippine Holdings Corporation. Pasig City: First Philippine Holdings Corporation.
- Energy Development Corporation (2009). PNOC Board of Directors Retrieved January 26, 2008
- First Philippine Holdings Corporation. (2007). Annual report Retrieved November 24, 2008
- First Philippine Holdings Corporation. (2006). Forty-five/fortified: 2006 Annual Report.
- First Philippine Holdings Corporation. (2005). Delivering on commitments: 2005 Annual Report.
- First Philippine Holdings Corporation. (2004). Philippines First: 2004 Annual Report.
- First Philippine Holdings Corporation. (2003). Eye on excellence: 2003 Annual Report.
- First Philippine Holdings Corporation. (2002). We continue to create: 2002 Annual Report.
- First Philippine Holdings Corporation. (2001). Annual report.
- First Philippine Holdings Corporation. (2000). Annual report.
- Koppisch, J. (2008). Special report: 48 heroes of philanthropy Retrieved December 15, 2008
- Lopez Group. Lopez Link, a monthly publication of the Lopez Group
- Rodrigo, R. (2001). Firebringer: Forty years of First Philippine Holdings 1961-2001. Pasig City: Eugenio Lopez Foundation, Inc.
- Tanglaw. (2008)
- Tollways Management Corporation. (2008). Operation and maintenance of SCTEX awarded to joint venture group Retrieved January 4, 2008
- Oscar M. Lopez on turning 80 years old
- Oscar M. Lopez timeline: Living life well
- International Association of Business Communicators (IABC) Philippines 2010 Lifetime Achievement Award in Communication Excellence in Organizations
- Oscar M. Lopez Remarks at the Conferment of the Lifetime Achievement Award in the 2010 Communication Excellence (CEO Excel)
- Oscar M. Lopez 2009 The Outstanding Filipinos (TOFIL) Awardee for Business