Korea Zinc Secures 540 Billion Won Through Hanwha Stake Sale... Reaffirms Relationship Between Both Companies (Comprehensive)

Hanwha Corporation Sells Shares to Hanwha Energy... Secures 152 Billion KRW
Hanwha Increases Major Shareholder Stake in Group

Korea Zinc Also Proceeds with Early Repayment of Subsidiary Loans
Raises Total 540 Billion KRW in Cash for Funding

Korea Zinc secured approximately 542 billion KRW in funds by selling its shares in Hanwha Corporation and early recovery of loans to its Australian subsidiary. This move secured additional cash liquidity amid a management rights dispute with Youngpoong and MBK Partners. It is also interpreted as a reaffirmation of the friendly relationship between Chairman Choi Yoon-beom of Korea Zinc and Vice Chairman Kim Dong-kwan of Hanwha Group.

According to Korea Zinc and Hanwha Group on the 6th, both companies agreed to sell all of Korea Zinc’s existing 7.25% stake (5,436,380 shares) in Hanwha Corporation to Hanwha Energy. The stock sale price is approximately 152 billion KRW.

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

This transaction is evaluated to have benefited both companies. Korea Zinc secured cash liquidity to reduce the debt burden increased by its recent open market share repurchase, while Hanwha significantly increased the group’s major shareholders’ stake, including Vice Chairman Kim. With this share purchase, Hanwha Energy’s stake in Hanwha Corporation rose from 14.90% to 22.16%, raising the Hanwha Group major shareholders’ stake in Hanwha Corporation to 55.83%.

Furthermore, Hanwha Group plans to maintain its stake in Korea Zinc, which is analyzed as another confirmation of the friendly relationship between the management of both companies. Both companies announced plans to further strengthen collaboration for business synergies, including the hydrogen value chain, carbon capture facility construction and establishment projects, offshore wind power joint development projects, and resource development related to mining.

Earlier, when the management rights dispute at Korea Zinc was triggered by the open market purchase by the Youngpoong-MBK alliance, Hanwha Group stated, "There is concern that if the management rights dispute prolongs due to the open market purchase, it may affect the success and sustainability of business cooperation," and expressed hope that the business cooperation relationship with Korea Zinc would proceed smoothly.

Meanwhile, Korea Zinc is also pushing for early recovery of approximately 390 billion KRW in funds loaned to its Australian subsidiary this month. This was resolved at the board meeting on the 17th of last month. Korea Zinc recovered the loan from its Australian subsidiary Arc Energy McIntyre and converted it into a debt guarantee.

Korea Zinc plans to use the approximately 542 billion KRW secured in this way to strengthen financial soundness, including repayment of borrowings incurred during the open market purchase process.