MBK "Goryeo Ayun Debt Increased 35 Times After Chairman Choi's Inauguration"
Goryeo Ayun "Malicious Claim"
Union Protests Against Tender Offer
Yeongpung and MBK Partners, who launched a tender offer for Korea Zinc, claimed that since Chairman Choi Yoon-beom took office, unilateral management has damaged the company's financial soundness. Korea Zinc called the allegations malicious and one-sided and announced strong legal action.
Kim Kwang-il, Vice Chairman of MBK Partners, stated at a press conference held on the 19th at Lotte Hotel in Jung-gu, Seoul, "Since Chairman Choi took office, debt has increased due to reckless investments, profitability of Korea Zinc has declined, and cash flow has weakened due to excessive share buybacks aimed at defending management rights."
Vice Chairman Kim explained, "After Chairman Choi took office, bringing in a third party as a Korea Zinc shareholder without the consent of Yeongpung, the largest shareholder, was judged to have first broken the joint management that had continued for 75 years. After Advisor Jang Hyung-jin of Yeongpung thought that professional managers should be entrusted with Korea Zinc's management, MBK entered as the largest shareholder to prevent what looked like a family feud."
Kim Kwang-il, Vice Chairman of MBK Partners, is explaining the public tender offer for Korea Zinc shares at a press conference held on the 19th at Lotte Hotel in Jung-gu, Seoul. [Photo by Lee Sung-min]
According to MBK Partners, Korea Zinc's debt increased 35 times from 41 billion KRW in 2019, the year Chairman Choi took office, to 1.411 trillion KRW in the first half of this year. In particular, since Chairman Choi's inauguration in 2022, the debt size increased by 135% compared to the previous year, indicating that Chairman Choi's reckless investments negatively affected the company's profitability, according to MBK Partners.
They also claimed that if the share buybacks totaling 550 billion KRW, suspected to be aimed at expanding Chairman Choi's friendly shares, continue?including the remaining investment in the Australian wind power plant, the remaining investment in Kataman, interim dividend expenditures, and share buybacks that have been in full swing since March this year?then the net cash of 668 billion KRW as of the end of the first half of this year will be completely depleted and still insufficient.
MBK Partners and Yeongpung have been conducting a tender offer from the 13th of this month to the 4th of next month, purchasing Korea Zinc shares at 660,000 KRW per share, buying a minimum of 1,445,036 shares (6.98%) up to a maximum of 3,024,881 shares (14.61%). If the tender offer is successful, the combined stake of Yeongpung and MBK could increase to up to 47.7%.
Earlier, Yeongpung investigated allegations of personal corruption against Chairman Choi and announced legal disputes. Yeongpung stated, "Since Chairman Choi took office as CEO of Korea Zinc, he has begun to act in violation of the co-entrepreneurial spirit of Yeongpung Group's co-founders, violating the Commercial Act and other related laws, breaching fiduciary duties, and harming the interests of Korea Zinc shareholders," and filed for a provisional injunction to inspect and copy Korea Zinc's accounting books.
Chairman Choi Yoon-beom of Korea Zinc and Advisor Jang Hyung-jin of Young Poong. [Photo by each company]
Korea Zinc responded to the allegations against Chairman Choi by calling them "malicious and unverified one-sided claims" and said it plans to take strong legal measures such as defamation lawsuits. The company strongly opposed the tender offer, calling it a hostile takeover (M&A) aimed at seizing management rights.
Park Ki-duk, CEO of Korea Zinc, recently stated in a press release, "We officially express our opposition to the tender offer unilaterally conducted by Yeongpung in collusion with corporate raider MBK Partners," adding, "We will definitely protect the company from predatory speculative capital and greed colluding with socially condemned companies."
On the same day, the Korea Zinc labor union held a protest in front of MBK's headquarters in Gwanghwamun, Seoul, demanding the withdrawal of the Korea Zinc stock tender offer. The union claimed, "The predatory tender offer attempts by MBK Partners and Yeongpung threaten our right to survival and pose a fatal risk to the company's continuity."
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