Yeongpung "Injunction Request to Suspend Treasury Stock Buyback" Korea Zinc "Treasury Stock Acquisition Limit 6 Trillion"

Yeongpung "Breach of duty harming company and shareholder interests"
Koryo Zinc "No legal issues in acquiring treasury shares"

Youngpoong filed an injunction request on the 2nd at the Seoul Central District Court to halt the tender offer process for acquiring treasury shares of Korea Zinc.

Youngpoong explained, "Separate from the injunction request filed on September 13 to prohibit the acquisition of treasury shares of Korea Zinc, a special related party, during the tender offer period by MBK Partners and Youngpoong, this request aims to stop the process related to the Korea Zinc board of directors' resolution on the tender offer for treasury share acquisition, which constitutes a breach of fiduciary duty harming the interests of the company and all shareholders."

Youngpoong stated, "Since treasury shares can only be disposed of after six months of acquisition, considering the tendency for the stock price to revert to previous levels after the tender offer ends, if Korea Zinc purchases treasury shares at a price higher than the current tender offer price, the value of the acquired shares will drop by at least 40%," adding, "This not only violates the directors' duty of care and loyalty but also constitutes a breach of trust in the course of business."

In particular, they noted, "Even if the treasury shares are purchased for cancellation, it is normal and reasonable for the securities company acting as trustee to buy a small quantity within a certain price range when the stock price reverts to the previous level after the current tender offer, minimizing the impact on the market," and further explained, "Depending on the price of the canceled treasury shares, the amount of reduction in the company's equity capital will vary."

Meanwhile, Korea Zinc issued a statement on the same day after the Seoul Central District Court dismissed the injunction request filed by MBK and Youngpoong against Chairman Choi Yoon-beom of Korea Zinc, CEOs Park Ki-duk and Jung Tae-woong, and Korea Investment & Securities, saying, "We welcome the court's decision and express our deep gratitude to the judiciary for making a wise ruling."

Korea Zinc emphasized, "This means that the court has recognized that Korea Zinc's acquisition of treasury shares is legally permissible regardless of the tender offer period by Youngpoong." Korea Zinc explained, "The court's decision clarified that even though Korea Zinc is formally an affiliate of Youngpoong, it does not qualify as a 'special related party' under tender offer regulations."

Additionally, they announced that the current distributable profit is 6.0986 trillion KRW.

Korea Zinc stated, "As of the end of 2023, the amount calculated by deducting the legal reserve and unrealized gains from retained earnings (total equity minus capital stock minus capital surplus) is 6.9059 trillion KRW," and explained, "This was calculated by deducting the amount of treasury shares acquired after the previous fiscal year-end (46.7 billion KRW), the amount under trust contracts (550 billion KRW), and dividends and legal reserves after the previous fiscal year-end (309.6 billion KRW), and adding the amount from the disposal of treasury shares (99 billion KRW)."