Letter to Employees on the 19th
"Find Ways to Respond... Do Your Best in Your Own Positions"
Returned from Japan Visit to Secure Allies
Choi Yoon-beom, chairman of Korea Zinc, has officially declared his intention to defend management rights against MBK Partners' tender offer. Chairman Choi sent a letter to employees stating, "We will do everything in our power to block MBK's tender offer." MBK Partners expressed confidence in the success of the tender offer, and a fierce legal battle over management rights between the two sides is expected.
In the letter dated the 19th, Chairman Choi stated, "We have identified their weaknesses and mistakes and found ways to respond." He added, "Please understand that I cannot disclose more detailed plans," and urged employees, "I hope everyone does their best in their respective positions to repay your trust." This is the first time Chairman Choi has made an official statement regarding the current situation.
On the same morning, MBK Partners held a press conference at Lotte Hotel in Jung-gu, Seoul, expressing confidence in the success of the tender offer by saying, "We are not considering the scenario of failure," and "We believe we can secure at least the minimum 7% stake."
MBK Partners and Youngpoong are conducting a tender offer to purchase Korea Zinc shares at 660,000 KRW per share until the 4th of next month, aiming to acquire a minimum of 1,445,036 shares (6.98%) and up to a maximum of 3,024,881 shares (14.61%). If the tender offer is successful, the combined stake of Youngpoong and MBK could increase to as much as 47.7%. Excluding non-voting shares held by public interest foundations, they would effectively hold more than 50% of the shares.
Korea Zinc is reviewing various measures to respond to MBK Partners' tender offer. While there is a possibility that Chairman Choi might personally launch a counter tender offer, industry insiders generally view it as practically difficult for him to handle the enormous funds alone. If Chairman Choi proceeds with a counter tender offer, he would likely need to offer a higher price than MBK Partners' 660,000 KRW per share and a larger volume than 1,445,036 shares.
The minimum stake required for Chairman Choi's side to defend is 7.63%, which would require raising over 1 trillion KRW. A Korea Zinc official dismissed the idea, saying, "It is practically impossible for the chairman to raise the funds alone."
Chairman Choi is reported to have recently made a hurried visit to Japan to meet with representatives of global companies in an effort to secure allies. In his letter, he mentioned, "We have found a way to respond," which is interpreted as referring to his visit to Japan.
MBK Partners argues that Korea Zinc, which is considered a special related party with Youngpoong, cannot purchase its own shares under the Fair Trade Act. However, Korea Zinc is reportedly not ruling out the possibility of buying back its shares after conducting various legal reviews.
Korea Zinc has also initiated legal actions. It is pursuing all possible legal procedures, including filing injunctions to inspect and copy board meeting minutes and accounting books, representative lawsuits against Youngpoong's management, injunctions to suspend the duties of Youngpoong directors, criminal complaints for breach of duty, and complaints to regulatory authorities for violations of the Capital Markets Act.
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