MBK "Korea Zinc Rights Offering Disrupts Market Order... Exploring All Legal Measures"

MBK Partners and Yeongpung strongly criticized the 2.5 trillion KRW general public offering rights issue by Korea Zinc on the 30th, calling it an "act that disrupts existing shareholders and market order."

They issued a statement following Korea Zinc's rights issue announcement, saying, "We will take all legal measures to block this decision by Korea Zinc."

Korea Zinc held a board meeting that day and announced plans to proceed with a general public offering rights issue, issuing new shares at 670,000 KRW per share, amounting to 20% of the total issued shares excluding treasury shares scheduled for cancellation.

MBK and Yeongpung stated, "Chairman Choi Yoon-beom caused enormous financial damage to the company by conducting a tender offer for treasury shares at 890,000 KRW per share using high-interest borrowings, and now he is trying to cover that financial damage with public money. Whether the company suffers damage or shareholder value is diluted, it has been proven once again today that Chairman Choi's only concern is preserving his position."

Korea Zinc, which is undergoing a management rights dispute, held an emergency board meeting at its headquarters in Jongno-gu, Seoul on the 30th, and is expected to take measures regarding the request by the Yeongpung-MBK Partners alliance to convene an extraordinary general meeting of shareholders. Photo by Jo Yong-jun

They explained that the 670,000 KRW per share price is only an estimated price at the current point, and by early December when subscriptions begin, the stock price will likely fall further, resulting in an even lower issue price.

According to the 'Regulations on the Issuance and Disclosure of Securities,' the final issue price is calculated based on the weighted arithmetic average stock price from the third to the fifth trading day before the general subscription.

MBK and Yeongpung argued, "The value of the remaining shareholders' stocks will be further diluted," and claimed, "Chairman Choi's decision on the rights issue is an act of confessing that the tender offer for treasury shares constitutes breach of trust."

They emphasized, "We intend to hold Chairman Choi and the board accountable to the end," and added, "As promised to Korea Zinc's shareholders and the public, we will devote all efforts to restoring Korea Zinc's corporate governance, which has collapsed to this extent."

It is reported that MBK has begun legal review work to respond to Korea Zinc's rights issue, which dilutes shares. The market expects discussions on injunctions to prohibit new share issuance and other measures.