Court Dismisses Youngpoong's Injunction Request... Korea Zinc Now Able to Repurchase Treasury Shares

As Yeongpung and Korea Zinc are engaged in a management rights dispute, the court dismissed Yeongpung's injunction request to prohibit Korea Zinc from acquiring its own shares. This allows Korea Zinc to purchase its own shares to defend its management rights.

Seoul Central District Court, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

On the 2nd, the Civil Division 50 of the Seoul Central District Court (Presiding Judge Kim Sang-hoon) dismissed Yeongpung's injunction request against Korea Zinc Chairman Choi Yoon-beom's side to prohibit the acquisition of treasury shares. Korea Zinc can continue to pursue the purchase of its own shares as a means of defending its management rights.

Previously, Yeongpung and the private equity fund (PEF) operator MBK Partners filed an injunction request with the court to prevent Korea Zinc from acquiring its own shares during the tender offer period (September 13 to October 4), stating their intention to launch a tender offer to secure management rights of Korea Zinc.

According to Article 140 of the Capital Market Act, a tender offeror and its special related parties cannot purchase shares of the target company by means other than the tender offer during the tender offer period.

At the injunction hearing held on the 27th of last month, Yeongpung argued that Korea Zinc is a special related party belonging to Yeongpung’s affiliates, making the purchase of treasury shares impossible. On the other hand, Korea Zinc countered by claiming Yeongpung’s predatory intent and argued that since it is no longer a special related party of Yeongpung, the separate purchase prohibition regulation does not apply.

Following the court’s decision that day, Korea Zinc is expected to immediately hold a board meeting to approve the purchase of treasury shares and increase its stake to defend its management rights.

Meanwhile, the hearing for Yeongpung’s injunction request to allow inspection and copying of Korea Zinc’s accounting books is scheduled to be held in the afternoon of the same day at the Civil Division 51 of the same court.