"Request to Suspend MBK·Yeongpung Contract Effectiveness"... Yeongpung Precision Files Injunction Request

Last Month, Yeongpung and MBK Executives Sued for Breach of Fiduciary Duty
Injunction to Suspend Contract Effectiveness Until Relevant Judgment
"If Hostile M&A Succeeds, Yeongpung's Corporate Value Will Be Lost"

Youngpoong Precision announced on the 6th that it has filed a provisional injunction with the Seoul Central District Court to prohibit the execution of the management cooperation agreement and the money loan agreement between Youngpoong and MBK Partners. The subjects are five individuals: Youngpoong’s outside directors Park Byung-wook, Park Jung-ok, Choi Chang-won, and CEO Park Young-min and Bae Sang-yoon, who were detained due to a serious accident.

Last month, Youngpoong Precision filed a complaint accusing Youngpoong’s advisor Jang Hyung-jin, three outside directors, and MBK Partners’ vice chairman Kim Kwang-il of breach of trust. This time, they requested the court to suspend the effectiveness of the contracts between Youngpoong and MBK until the final judgment on the main case is confirmed.

Choi Yoon-beom, Chairman of Korea Zinc, is speaking 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]

Youngpoong Precision argued that the management cooperation agreement provides unilateral economic benefits to MBK. While MBK receives management rights and call options for Korea Zinc, Youngpoong suffers losses under a breach of trust contract. In particular, they raised concerns about the structure in which MBK also secures the disposal rights and voting rights of the Korea Zinc shares held by Youngpoong.

They also pointed out the 300 billion KRW money loan agreement signed last month. It is claimed that Youngpoong’s outside directors approved a method where Youngpoong lends funds for MBK’s public tender offer settlement, causing Youngpoong’s borrowings to increase sharply.

A Youngpoong Precision official explained, "It is a serious issue that three outside directors, who are not engaged in the company’s regular operations, made a decision to borrow an amount equivalent to 7% of Youngpoong’s equity capital and illegally lend it again to a third party."

Furthermore, they warned that if MBK’s hostile M&A succeeds, there is a high risk that Youngpoong will lose even its shares in Korea Zinc. This could severely damage Youngpoong’s corporate value and lead to enormous losses that the individual assets of Youngpoong’s directors cannot cover.

Previously, Youngpoong Precision filed a complaint accusing that the contracts between MBK and Youngpoong were made through a 'secret collusion,' causing losses to Youngpoong while MBK gained huge profits. The prosecution has assigned this case to the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office and is currently investigating.

Youngpoong Precision plans to continue legal actions regarding various contracts and transactions between Youngpoong and MBK.