Yeongpung and Korea Zinc Clash in Court... "Illegal Treasury Stock Acquisition" vs. "Legal Purchase" Response

The management dispute between Youngpoong and Korea Zinc continued in court.

The Seoul Central District Court Civil Division 50 (Presiding Judge Kim Sang-hoon) held the first hearing on the 27th regarding Youngpoong's application for a provisional injunction to prohibit Korea Zinc Chairman Choi Yoon-beom's side from acquiring treasury shares.

Youngpoong and private equity fund (PEF) operator MBK Partners announced their intention to launch a tender offer to secure management rights of Korea Zinc and filed the provisional injunction to prevent Korea Zinc from acquiring its own shares during the tender offer period from September 13 to October 4.

According to Article 140 of the Capital Market Act, a tender offeror and its special related parties are prohibited from purchasing shares of the target company by means other than the tender offer during the tender offer period.

At the hearing, Youngpoong argued, "Korea Zinc is an affiliate belonging to Youngpoong and is a special related party with a shareholding relationship with Youngpoong."

They added, "The tender offer aims to rectify Chairman Choi Yoon-beom's mismanagement and normalize Korea Zinc," stating that "(Chairman Choi) severely damaged profitability and financial structure to seize management rights."

In response, Korea Zinc stated, "We have publicly announced that Korea Zinc is no longer a special related party of Youngpoong," and "the separate purchase prohibition regulation does not apply."

If the court accepts Youngpoong's provisional injunction application, Korea Zinc will be unable to purchase treasury shares, which is one of the means to defend management rights.