[Q&A] Chairman Choi Yunbeom: "Korea Zinc's Potential Value Over 1 Million Won... Ignio Suspicion Due to Misunderstanding of New Business"

Stated Position at Press Conference on the 2nd
"Realizing the Potential Value of Korea Zinc in the Next 2-3 Years"

Choi Yoon-beom, chairman of Korea Zinc, has injected a total of 3.1 trillion won to purchase treasury shares in response to the public tender offers by Youngpoong and MBK Partners.

At a press conference held on the 2nd at the Grand Hyatt Hotel in Yongsan-gu, Seoul, Chairman Choi personally explained the background of the public tender offer, stating, "We aim to protect the company from hostile and predatory attacks and to enhance corporate and shareholder value, thereby swiftly resolving the current capital market turmoil and uncertainties regarding the company’s vision and future."

He continued, "Through hostile mergers and acquisitions (M&A), excellent companies’ management rights are taken away, leading to restructuring, excessive cost-cutting pressures, technology leakage, and asset disposals, which inevitably cause employment instability, collapse of safety and environmental systems, and breakdown of cooperative frameworks. We want to protect our employees and partner companies from these risks."

Chairman Choi Yoon-beom of Korea Zinc is answering questions from the press at the Korea Zinc press conference held on the afternoon of the 2nd at the Grand Hyatt Hotel in Yongsan-gu, Seoul.
[Photo by Yonhap News]

Korea Zinc will conduct a public tender offer for treasury shares at 830,000 won per share from the 4th to the 23rd. Including the shares Bain Capital plans to acquire, a total of 18% additional shares will be secured. All treasury shares acquired through the tender offer will be canceled to enhance shareholder value.

Chairman Choi explained, "Bain Capital aims to simultaneously conduct a 2.5% tender offer, and Korea Zinc a 15.5% tender offer. The shares subject to the tender offer amount to 18%, which is to ensure that investors and shareholders clearly participate in the tender offer we propose."

Regarding his relationship with Youngpoong advisor Jang Hyung-jin, he said, "If for any reason Advisor Jang has ever misunderstood or felt offended, I sincerely apologize as a younger person. I believe I have many shortcomings in that regard."

The following is a Q&A session with Chairman Choi Yoon-beom, President Park Ki-duk of Korea Zinc, and lawyer Cho Hyun-duk, summarized in a question-and-answer format.

Chairman Choi Yoon-beom of Korea Zinc, who is engaged in a management rights dispute with MBK Partners and Youngpoong, is attending the Korea Zinc press conference held on the afternoon of the 2nd at the Grand Hyatt Hotel in Yongsan-gu, Seoul. From left: President Park Ki-duk, Chairman Choi, Lawyer Cho Hyun-beom.
[Photo by Yonhap News]

Q. The current stock price is at an all-time high (in the 700,000 won range). Even if you win the share competition, there are concerns about increased financial burdens. What is the company’s response strategy?

A. (President Park) Financial soundness has already been verified by external credit rating agencies, and we believe that even with additional financial burdens, soundness will be maintained. Temporary financial burdens may arise, but considering long-term plans, it is a manageable level.

A. (Chairman Choi) Amid many speculations since the start of the tender offer, there is one statement by President Kang Sung-doo that I uniquely agree with: considering only Korea Zinc’s potential value, the stock price could exceed 1 million won and even reach 1.2 million won. We believe that by advancing the non-ferrous smelting business we currently operate along with the Troika Drive new growth engines, we can realize Korea Zinc’s true intrinsic value within 2 to 3 years. The most suitable management to realize this intrinsic value is the current management team. I am confident that Youngpoong and MBK are not suitable management.

Q. Youngpoong has filed another injunction to prohibit treasury share purchases. What is your position on this?

A. (Chairman Choi) It appears to be a reiteration of much of what was decided in today’s injunction. As you know, the 4th is the last day of the tender offer. Counting only trading days, there is only one day left. I believe this urgent situation is being exploited to maximize uncertainty about the 3.1 trillion won tender offer being pursued by Korea Zinc and Bain Capital, to induce participation in their own tender offer. Filing injunctions again and actively spreading false information that only 58.6 billion won worth of shares can be purchased is, in my view, an act close to market manipulation and capital market disruption. The court ruling issued today and the disclosure following the board resolution have dispelled all of this.

A. (Lawyer Cho) Although I have not confirmed the details, I understand the request is to halt the public tender offer announced today. Based on media reports, the claims can be broadly categorized into two: that acquiring shares at a high price when the original stock price was 500,000 won constitutes breach of fiduciary duty, and that using company funds to defend management rights is also breach of fiduciary duty. All these claims were already raised in court and were dismissed. Particularly, the high-price acquisition was a major issue, but the court judged that the company’s value is currently unclear. Even Youngpoong declared it would buy shares at 660,000 won after trading at 500,000 won, then raised the offer to 750,000 won. Youngpoong has never conducted due diligence on Korea Zinc. Without due diligence, the intrinsic value of the company cannot be known. That is why the tender offer price is being raised again. Seeing this behavior, the court found it difficult to confirm the company’s value at this time. Also, the claim that using company funds to defend management rights is illegal was already raised and rejected at the injunction stage.

Q. You launched the tender offer together with Bain Capital. Please explain the shareholder agreement with them.

A. (Lawyer Cho) First, Korea Zinc and Bain Capital do not have a separate contract. Youngpoong and MBK have a kind of management cooperation agreement between corporations, but in the tender offer Korea Zinc is conducting, there is no contract between the corporation and individuals. Bain Capital has only signed a contract with Chairman Choi Yoon-beom’s side, who is a shareholder of the company. This contract is not subject to board approval. Specific details can be confirmed later through tender offer disclosures.

Q. Please clarify the investment allegations regarding One Asia Partners raised by Youngpoong.

A. (Chairman Choi) Our company invested in a private equity fund operated by One Asia Partners through rational and normal management decisions to enhance investment returns using surplus funds. All necessary procedures were followed in accordance with relevant laws and internal regulations during the investment decision process.

Q. You needed about 7% additional shares to defend management rights, but the shares purchased this time, combined with Bain Capital’s, amount to a whopping 18%.

A. (Chairman Choi) This decision was made after considering various complex factors. It is to ensure the purchase of about 8% of the shares needed now and to encourage investors and shareholders to participate in the tender offer we are proposing.

Q. There are claims that Ignio Holdings, in which 580 billion won was invested, does not actually exist.

A. (Chairman Choi) I have wanted to speak at length about this someday. One of the most incomprehensible falsehoods during the tender offer process is the claim that Ignio Holdings and related companies are ghost companies without substance. This is obviously not true. Youngpoong and MBK have stated that even if they take over Korea Zinc’s management rights, they will continue to invest in the Troika Drive new growth engine. However, raising such suspicions suggests to me that they do not understand what the Troika Drive we are promoting is at all. Ignio is a company that collects electronic waste, extracts rare precious metals from it, and sells them to smelters. It is a very important pillar of the Troika Drive Korea Zinc is currently pursuing. I believe these baseless speculations arose because they do not understand the business model and vision we are promoting.

Q. What do you think caused the long-standing partnership with Youngpoong to break down?

A. (Chairman Choi) That is a very difficult question. Today is a day to explain how we will proceed with the treasury share tender offer as disclosed. I understand your curiosity, but I do not think it is appropriate to discuss personal matters between me and Advisor Jang Hyung-jin here. However, if for any reason Advisor Jang has misunderstood or felt offended, I sincerely apologize as a younger person. I believe I have many shortcomings.

I am here today not as an individual named Choi Yoon-beom, but as the chairman of Korea Zinc’s board of directors, representing our employees, partners, local communities, and the public with responsibility to alleviate their concerns. If I said anything unpleasant about Advisor Jang or Youngpoong here, I apologize personally. However, I hope you understand that as a representative of Korea Zinc, I had no choice but to speak frankly.

Q. There is a view that the conflict between Youngpoong and Korea Zinc began because friendly shareholders like Hanwha increased their stakes, causing Youngpoong dissatisfaction.

A. (Chairman Choi) I understood it as implying that Youngpoong, as a major shareholder, is the owner of Korea Zinc. I cannot agree with that. A corporation has shareholders, and the board of directors and shareholders’ meetings decide various matters on their behalf. The management, including CEOs authorized by the board, work daily. If a shareholder with 25% stake is the owner of a listed company, are the other 75% shareholders just servants? I am chairman of Korea Zinc’s board not because I own shares or because my surname is Choi. The shareholders elected the board at the shareholders’ meeting, and the board appointed me, allowing me to perform the chairman’s duties with honor. I have been legally authorized and work to fulfill my duties and capabilities as a manager.

Q. You said you would help Youngpoong if needed. Is this a gesture of reconciliation?

A. (Chairman Choi) It is a gesture of reconciliation. Regardless of the reasons, I believe it is neither appropriate nor good for MBK and Youngpoong to unite and try to solve Youngpoong’s problems through hostile M&A. I believe that if Korea Zinc and Youngpoong put their heads together, there are solutions that can be shared and understood.