Chairman Choi Yoon-beom of Korea Zinc Bowed His Head: "We Will Definitely Win at the General Meeting"[Q&A]

Urgent Press Conference by Korea Zinc on the 13th
"Capital Increase Was Premature" Apology
Announcement of Measures to Strengthen Board Independence

Choi Yoon-beom, chairman of Korea Zinc, who is engaged in a management rights dispute with MBK Partners and Youngpoong, expressed confidence, saying, "I am certain that we will never lose." He stated that he gained trust from shareholders during the process of meeting various shareholders following the announcement of the general public rights offering.

He also declared that he would step down from the position of chairman of the board to establish a board mechanism that faithfully listens to shareholders' opinions. Regarding the recent withdrawal of the rights offering, he apologized, saying that shareholders' opinions were not sufficiently considered.

Choi Yoon-beom, Chairman of Korea Zinc, is greeting at the Korea Zinc press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. On the same day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible, and an outside director will take over as chairman of the Korea Zinc board." Photo by Kim Hyun-min

At a press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, Chairman Choi said, "I sincerely apologize with a humble heart for the market confusion and concerns of shareholders and investors caused during the process of promoting the general public rights offering." He added, "We will strengthen the independence of the board of directors and promote measures to protect and involve minority shareholders, becoming a company that listens more attentively to the voices of shareholders and the market."

Korea Zinc has decided to pursue a plan to have an outside director serve as the chairman of the board. Chairman Choi explained, "I will step down from the chairman position as soon as possible. By separating the roles of chairman of the board and CEO and having an independent outside director serve as chairman, the independence of the board will be further strengthened." To this end, they plan to amend the articles of incorporation at the upcoming shareholders' meeting.

In addition, measures to enhance board diversity and shareholder communication will also be pursued. They plan to actively consider appointing foreign outside directors and IR-dedicated outside directors. They will also review the introduction of MOM (Majority of Minority Voting) to ensure that the opinions and public sentiment of minority shareholders are actively reflected. They plan to strengthen shareholder-friendly policies, including the introduction of quarterly dividends.

Below is a Q&A with Chairman Choi.

Choi Yoon-beom, Chairman of Korea Zinc, is speaking at a Korea Zinc press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. On this day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible and have an outside director take over as chairman of the Korea Zinc board." Photo by Kim Hyun-min

Q. What is the background behind your pledge to introduce policies for minority shareholders?

A. The casting votes at Korea Zinc currently belong to institutional investors, foreign institutions, and minority shareholders. The various shareholder-friendly policies announced today stem from the question, 'What can we do for all these shareholders?' Although Korea Zinc has shown good business performance so far, we have considered various measures to have a more transparent and independent board function. After contemplating ways to directly listen to the opinions of various shareholders and reflect them in company management, we shared some of those measures today. Beyond what was announced today, we will continue to pursue additional policies for shareholders. The background for introducing MOM is that, while gathering opinions on the rights offering from various market participants, we realized the importance and weight of shareholders' opinions. If there is a conflict of interest between existing shareholders and minority shareholders, we sought a way to listen more heavily to minority shareholders' opinions and reflect them, which led to this idea.

Q. The explanation that you did not expect the circulating shares to decrease significantly after the tender offer for treasury shares is hard to accept.

A. At least with our capabilities, we could not predict the circulating shares. We did not expect such a huge stock price fluctuation with very low trading volume after the tender offer for treasury shares ended. So, when considering whether to accept the unstable stock price while maintaining the circulating shares as they were, we decided on the rights offering after careful consideration. Of course, we should have listened to the market's voice first and made a judgment, but this matter had to be kept extremely confidential, so we could not take those steps in advance. I sincerely apologize and humbly accept this.

Q. Have you prepared any measures to expand circulating shares besides the rights offering?

A. The issue of circulating shares still exists, and we are currently reviewing various measures. Some suggest that a stock split could partially resolve this, while others are concerned even about that, so it is difficult to say how we will solve it at this moment. However, as always, we will keep all options open and listen to and accept shareholders' opinions to make Korea Zinc a better stock.

Q. All the policies announced today seem to require amendments to the articles of incorporation, which is a special resolution at the shareholders' meeting. Since the consent of major shareholders is necessary, how do you plan to persuade them?

A. Personally, I think that Youngpoong and MBK will agree to my proposal to step down as chairman and work only as chairman. For other measures, I will actively promote them while persuading and explaining as much as possible.

Q. Youngpoong and MBK recently secured nearly 40% of shares, and the market says the share battle is practically over. Have you established a strategy to respond to the extraordinary shareholders' meeting?

A. Besides Korea Zinc, Youngpoong, and MBK, there are many other shareholders. Many institutional investors, foreign institutional investors, and individual investors who have held and continuously supported Korea Zinc remain. If we thought that withdrawing the rights offering would mean losing at the extraordinary shareholders' meeting, we would have continued the rights offering even if it was difficult. However, if we can regain the trust of many shareholders, I am confident that we will never lose at the upcoming extraordinary and regular shareholders' meetings. We accept the disclosure that they (Youngpoong and MBK) have made additional share purchases as a fact, but we are not greatly concerned about it.

Q. Do you have any decisive counterattack to reduce the current share gap with Youngpoong and MBK?

A. It is true that the share gap widened as Youngpoong and MBK secured additional shares through on-market purchases after the tender offer. However, considering other shareholders who hold the so-called casting votes at the extraordinary shareholders' meeting, I do not think it is a situation that shakes the board significantly. Shareholders, if I may speculate, will come to the shareholders' meeting and vote with the thought, 'Who will make this company and stock better?' If shareholders decide management rights, and the current management's opponents are Youngpoong and MBK, I believe we can win this fight.

Q. How much friendly shares have you secured at this point?

A. It is difficult to determine exactly what the term 'friendly shares' means. I understand that shareholders have invested while watching Korea Zinc's growth and management methods. We will just work harder to maintain their trust. Those who have invested in Korea Zinc and gained significant profits are all friendly shares to me, and I will answer by saying that I will strive to help them gain even more benefits.

Q. Do you plan to transfer the 1.4% treasury shares you currently hold to the employee stock ownership association or to cancel them?

A. Those treasury shares were purchased for employee evaluation, compensation, and cancellation purposes, and no decision has been made on how they will be used under the current circumstances. On the 30th of last month, speculative reports about transferring these treasury shares to the employee stock ownership association were rampant, but they were mere speculation. We will inform you immediately if any decisions are made after observing various situations. However, not only these speculations but also the unauthorized distribution of board information to the market in improper ways continues to occur. I deeply regret such actions that further exacerbate the already confusing and unstable stock price situation.

Q. Youngpoong and MBK continue to raise suspicions about Korea Zinc's U.S. business. The market doubts whether Troika Drive can establish itself as a new business. What is your view?

A. Criticizing the U.S. investment while saying that Korea Zinc's Troika Drive business, i.e., the new growth engine, will continue as planned shows that they do not properly understand Troika Drive. For example, Korea Zinc declared that it will expand copper production from the current 34,000 tons to 150,000 tons by 2028. Currently, this copper is produced using 100% recycled copper, which cannot be simply mined from mines but must be supplied from urban mines. The investment in the U.S. recycling business was made because the larger the city, the larger the urban mine scale. The U.S. businesses are being pursued to achieve this strategic goal. As these businesses are developing day by day and profitability is improving, I believe that if we wait a little longer, the business itself will generate profits and be reflected in the stock price.