Yeongpung "May Withdraw Accusation Against Korea Zinc Director... Except Choi Yoon-beom" Failed Partnership

Chairman Choi Yoon-beom Judged as Cause of Conflict Between Both Companies
Korea Zinc Unlikely to Withdraw Legal Action

Yeongpung and MBK Partners are reportedly determined not to withdraw the criminal complaint against Choi Yoon-beom, chairman of Korea Zinc. Earlier, Yeongpung and MBK filed criminal complaints against the directors who supported the company’s share buyback resolution at the Korea Zinc board meeting. While they may withdraw these complaints at an appropriate time, they have decided to maintain a tough stance against Chairman Choi. This is seen as a definitive end to the 75-year partnership between the Jang and Choi families in the Yeongpung Group.

According to industry sources on the 28th, Yeongpung is considering withdrawing the legal actions filed against 10 directors of Korea Zinc. This is because the competition for share acquisition, including the public tender offer, has subsided, and continuing legal disputes is deemed inappropriate. However, since they have not yet regained management rights following the tender offer attempt, it is considered too early to discuss the timing of withdrawal.

Jang Hyeong-jin, Advisor at Youngpoong, and Choi Yoon-beom, Chairman of Korea Zinc.
[Photo by Yonhap News]

However, Yeongpung maintains its position to continue the complaint against Chairman Choi. A business insider said, "The reason Yeongpung joined hands with MBK is because dissatisfaction with Chairman Choi’s management deepened. While there is a possibility of withdrawing complaints against other executives in hopes of future cooperation, they are expected to hold Chairman Choi legally accountable to the end."

Earlier this month, when the Korea Zinc board approved the share buyback, Yeongpung filed criminal complaints against the directors who supported the resolution, accusing them of "breach of fiduciary duty causing financial loss to the company." In particular, they have strongly criticized Chairman Choi for prioritizing personal interests over shareholder interests during his tenure as CEO.

Yeongpung’s tough stance against Chairman Choi is because they see him as the starting point of the current crisis. Korea Zinc reportedly caused business difficulties by blocking the treatment of sulfuric acid from Yeongpung’s Seokpo smelter and cutting off exports through Seorin Trading (now KZ Trading).

On the other hand, Korea Zinc claims that the relationship between the two companies deteriorated when Yeongpung attempted to process waste from the Seokpo smelter at the Onsan smelter. Yeongpung rebutted this by stating, "The pyrite cake and cadmium cake that Korea Zinc raised issues about are currently not being handed over to Korea Zinc."

With Yeongpung maintaining a tough stance against Chairman Choi, the partnership between the Jang and Choi families is clearly heading toward a definitive split. In particular, it is reported that Yeongpung does not intend to lift legal actions against Yeongpung Precision, a Korea Zinc affiliate, as well as against Jang Hyung-jin, Yeongpung advisor, and three outside directors of Yeongpung.

The split between the two sides is expected to become clearer following the extraordinary shareholders’ meeting. The results of Korea Zinc’s share buyback, which ended on the 23rd, are likely to be announced around the 28th. If Korea Zinc secures up to 2.5% of shares through its ally Bain Capital, it will hold a total of 37.89% of shares, including 1.4% of treasury shares that can be sold to friendly parties. Yeongpung and MBK currently hold 38.47% of shares. Since neither side holds more than half of the voting rights, the vote battle at the shareholders’ meeting is expected to be a crucial variable.