Second Injunction Dismissed... MBK "Will File Main Lawsuit" vs Korea Zinc "Proving Market Disruption"

MBK Partners and Youngpoong expressed their regret over the court's decision to dismiss the second injunction request aimed at halting Korea Zinc's tender offer for its own shares, stating their intention to continue the dispute through the main lawsuit.

On the 21st, following the news of the court's dismissal of the injunction, MBK and Youngpoong issued a statement emphasizing, "Our position is that Korea Zinc's current tender offer for its own shares constitutes an act causing irreparable and significant damage to the company, amounting to a breach of fiduciary duty by the directors, and that the company cannot appropriate the voluntary reserves accumulated by the shareholders' meeting resolution solely by a board resolution."

However, considering the nature of an injunction as a preliminary prohibition, they interpreted the court's decision as meaning that "it has not been clearly proven and cannot be definitively concluded that the tender offer for treasury shares constitutes a breach of fiduciary duty."

MBK and Youngpoong stated, "While respecting the injunction court's decision, we plan to hold Korea Zinc's current management accountable for the tender offer through the main lawsuit, including claims for damages and breach of fiduciary duty."

They added, "Unlike this injunction case which required a swift decision, we are confident that in the main lawsuit phase, with sufficient time, we will clearly expose the problems and illegality of the tender offer for treasury shares," emphasizing, "This is not only part of our efforts as the largest shareholder but also stems from our mission to contribute to improving governance as members of the Korean capital market."

In their first statement immediately after the injunction dismissal news, they said, "Based on a clear majority of voting rights, we will cooperate with the remaining shareholders to restore Korea Zinc's broken governance and make every effort to recover corporate and shareholder value."

They continued, "It seems that during the relatively short injunction hearing process, the court was not sufficiently persuaded about the negative impact this injunction decision will have on Korea Zinc, as well as the significant adverse effects it will have on the domestic capital market and corporate governance in the future," expressing regret over this point.

They emphasized that since Korea Zinc's tender offer for treasury shares is financed by borrowings amounting to 2.7 trillion won, the company's financial structure will be damaged for a long period, causing harm to the remaining shareholders, and this fundamental issue remains unchanged.

They further explained, "We still have serious concerns that the tender offer for treasury shares aimed at maintaining Chairman Choi Yoon-beom's position will ultimately result in damage only to the company and the remaining shareholders."

Regarding the schedule for convening an extraordinary shareholders' meeting, they added, "We will announce our position after observing the results of Korea Zinc's tender offer for treasury shares."

Meanwhile, Korea Zinc, after the dismissal of the second injunction request amid the management dispute on the 21st, stated, "We will complete the tender offer for treasury shares and secure as many voting rights as possible to prevent a hostile takeover (M&A)."

In a statement released immediately after the court's dismissal decision, Korea Zinc said, "The market disruption intent of the Youngpoong-MBK alliance has been proven," and made the following remarks.

Korea Zinc stated, "This proves that the tender offer for treasury shares was a deliberately planned trick to increase uncertainty about Korea Zinc's tender offer, create anxiety among shareholders, and induce them to respond to Youngpoong and MBK's tender offer."

Korea Zinc also claimed, "The tender offer price for Korea Zinc's shares is 60,000 won higher than that of Youngpoong and MBK, representing a confirmed profit," adding, "Nevertheless, since artificial financial damage was inflicted on shareholders holding more than 5%, it will be difficult to avoid investigation and legal punishment for market manipulation and capital market disruption."

They further stated, "The Youngpoong-MBK alliance has continued to spread false judicial risks and changed their stance on the tender offer price during the tender offer process," and "They have continuously misled about Korea Zinc's financial soundness and business excellence."

Korea Zinc mentioned that MBK has not joined the Stewardship Code and that Youngpoong has failed to properly improve major accidents and environmental pollution, emphasizing, "The dismissal of this injunction means that preventing MBK, which ignores social responsibility, and Youngpoong, a loss-making smelting company, from colluding to manage Korea Zinc is in the best interest of the entire company."

Korea Zinc concluded, "We will complete the legally proceeding tender offer for treasury shares according to the court's decision," and "We will continue to strengthen voting rights to prevent the Youngpoong-MBK alliance from damaging the nation's key industries."