Financial Supervisory Service Begins Accounting Review of Korea Zinc and Young Poong

If Accounting Violations Are Found, It Will Be Converted to an Audit Investigation

On the 16th, the Financial Supervisory Service (FSS) initiated an accounting review of Korea Zinc and Yeongpung, which are currently involved in a management rights dispute.

The FSS notified Korea Zinc and Yeongpung the day before that it would begin the accounting review. The FSS plans to request explanations regarding suspicions such as provisions for liabilities or impairment of investment stocks, and if it determines there are violations of accounting standards or other issues, it will proceed with a supervisory investigation.

Typically, the accounting review is conducted through verification of disclosed materials, requests for documents, and explanations, taking about 3 to 4 months. If accounting violations are found and a supervisory investigation is initiated, auditors and others will be summoned for an in-depth investigation, which may lead to sanctions.

The largest shareholder Yeongpung and private equity fund (PEF) operator MBK Partners alliance, which is in a management rights dispute with Korea Zinc, announced that they secured a 5.34% stake in the tender offer that ended on the 14th. As a result, the Yeongpung-MBK alliance's stake in Korea Zinc increased from the previous 33.13% to 38.47%.

On the 12th of last month, Yeongpung, the largest shareholder of Korea Zinc, and MBK Partners signed a sudden management cooperation agreement and immediately began a tender offer the next day. The tender offer for treasury shares conducted by Korea Zinc Chairman Choi Yoon-beom and his ally Bain Capital will continue until the 23rd.