"MBK·Yeongpung Manipulate Market Prices Through Injunction Application"…Korea Zinc Requests Financial Supervisory Service Investigation

Korea Zinc announced that it submitted a petition to the Financial Supervisory Service on the 22nd, requesting an investigation into Youngpoong and MBK Partners, including Jang Hyeong-jin, an advisor, and Kim Kwang-il, vice chairman.

The petition calls for a prompt investigation into whether there were fraudulent unfair trading and market manipulation activities during the process of Youngpoong and MBK Partners filing injunctions to prohibit the acquisition of treasury stocks (first injunction) and to suspend the tender offer procedure (second injunction) against Korea Zinc's management, and the subsequent public opinion campaign using these injunctions.

Earlier, on the 13th of last month, Youngpoong and MBK Partners filed the first injunction to prohibit the acquisition of treasury stocks against Chairman Choi Yoon-beom and CEOs Park Ki-duk and Jung Tae-woong, but the Seoul Central District Court dismissed the case on the 2nd of this month. Following the dismissal, Youngpoong and MBK Partners immediately filed the second injunction to suspend the tender offer procedure for the acquisition of treasury stocks by Korea Zinc's management, which was also dismissed by the Seoul Central District Court on the 21st.

Korea Zinc pointed out that Youngpoong and MBK Partners utilized the two injunction applications to suppress Korea Zinc's stock price rise, citing reasons such as ▲ the immediate filing of the second injunction due to concerns that the dismissal of the first injunction would increase the possibility of Korea Zinc's stock price rising and negatively affect Youngpoong and MBK Partners' tender offer ▲ submitting content in the second injunction application that differed from Korea Zinc's official disclosures ▲ repeating the claims dismissed in the first injunction in the second injunction application, causing unnecessary misunderstandings.

"Second injunction aimed at suppressing stock price rise... fraudulent unfair trading activity"

Korea Zinc highlighted that one of the grounds for considering Youngpoong and MBK Partners' second injunction application as fraudulent unfair trading was the rapid filing of the second injunction immediately after the dismissal of the first injunction on the 2nd. As the dismissal of the first injunction increased the possibility of Korea Zinc's stock price rising, Youngpoong and MBK Partners promptly filed the second injunction and publicized it to the media to suppress Korea Zinc's stock price rise.

In fact, only about 1 hour and 30 minutes passed between the public announcement of the Seoul Central District Court's dismissal of the first injunction through the media and the reporting of the second injunction application. Upon the news of the second injunction application, the stock price immediately dropped by 1.85%.

Furthermore, Korea Zinc claimed that Youngpoong and MBK Partners filed the second injunction application based on different facts without verifying the resolution of Korea Zinc's board of directors held on the same day.

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

On that day, following the board resolution, Korea Zinc announced that the tender offer for treasury stocks would be a 'counter tender offer' starting on the 4th of this month, within the prior tender offer period of Youngpoong and MBK Partners, and that all treasury stocks acquired through the tender offer would be canceled. The initially disclosed tender offer price was 830,000 KRW.

However, Youngpoong and MBK Partners claimed in the second injunction application that Korea Zinc's tender offer would commence after their prior tender offer period and that the treasury stocks acquired through the tender offer would be used as a means for some executives to maintain management rights, contradicting the board resolution. They even claimed the tender offer price was 800,000 KRW, not the disclosed 830,000 KRW.

Korea Zinc emphasized, "Youngpoong and MBK Partners used the unfair means of the second injunction application solely to suppress Korea Zinc's stock price rise without verifying the facts. This constitutes fraudulent unfair trading activity."

"Timing of injunction application affected stock price... constitutes market manipulation"

Korea Zinc also confirmed that Youngpoong and MBK Partners repeated the claims dismissed in the first injunction application almost identically in the second injunction application. Although the allegations of illegality in Korea Zinc's acquisition of treasury stocks were all dismissed in the first injunction ruling, Youngpoong and MBK Partners persisted with the same claims in the second injunction application, causing unnecessary misunderstandings about Korea Zinc and negatively impacting the stock price, which could be considered market manipulation. They also pointed out that Youngpoong and MBK Partners could have filed an immediate appeal against the dismissal of the first injunction but chose not to and instead filed the second injunction.

In response, Korea Zinc stated, "This supports the fact that Youngpoong and MBK Partners had the intent of market manipulation and fraudulent unfair trading targeting Korea Zinc's stock price through each injunction application," and requested "a thorough investigation and corresponding disciplinary measures."