Choi Yoon-beom "Gaining Shareholders' Trust"... Koryo Zinc Dispute Circles Back to Proxy Battle (Comprehensive)

Choi Yoon-beom Resigns as Board Chairman... "Confident We Won't Lose"
'Special General Meeting Convened' MBK and Youngpoong May Seek Additional Shares

The management rights dispute between Korea Zinc and MBK Partners·Youngpoong is expected to be decided by a vote at the shareholders' meeting.

Choi Yoon-beom, chairman of Korea Zinc, confirmed his confidence in the support from shareholders other than MBK and Youngpoong, and decided to proceed with a governance restructuring centered on stepping down from the position of chairman of the board.

Having failed to secure a majority of voting rights, MBK and Youngpoong are expected to point out Chairman Choi's management failures and persuade shareholders for the upcoming vote battle at the shareholders' meeting. Given the recent decline in Korea Zinc's stock price, there is also a possibility of acquiring additional shares.

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 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, "After announcing the paid-in capital increase and through various meetings, if we can regain the trust of Korea Zinc shareholders excluding Youngpoong and MBK, I am confident that we will never lose at the extraordinary and regular shareholders' meetings."

He added, "They (MBK·Youngpoong) disclosed that they purchased an additional 1.36% stake, but we have gained much greater trust from existing shareholders," emphasizing, "We have once again expressed our determination to the shareholders who have trusted us so far, and implementing the governance restructuring is also to gain their support."

Chairman Choi's display of confidence is analyzed to be due to confirming friendly support from the National Pension Service, which holds a 7.5% stake, as well as from overseas and institutional investors.

Additionally, on the same day, Chairman Choi announced his resignation from the position of chairman of the board. Accordingly, Korea Zinc plans to amend its articles of incorporation to appoint an outside director as chairman. This decision is also interpreted as being mindful of criticisms from MBK and Youngpoong that the Korea Zinc board has acted as a 'rubber stamp' to protect Chairman Choi's management rights.

Chairman Choi explained, "This decision was made to strengthen the independence of the board and to enable the board to perform a healthy supervisory function over what the company management wants to do more efficiently and independently," adding, "At least, I think MBK and Youngpoong will agree that I will step down as chairman and work only as chairman of the company."

Under current law, amendments to the articles of incorporation require a special resolution at the shareholders' meeting, with at least two-thirds of attending shareholders' approval. Since MBK and Youngpoong hold 39.83% of Korea Zinc's issued shares, if they oppose, the amendment cannot realistically pass.

Yonhap News

Along with this, Korea Zinc has decided to consider introducing foreign outside directors or appointing outside directors dedicated to IR to strengthen communication with overseas investors and shareholders. It will also review measures to reflect minority shareholders' opinions, including MOM (Majority of Minority Voting), which recommends directors based on minority shareholders' participation to enhance protection and participation of small shareholders.

MOM is a method of shareholder meeting resolution based on the opinions of institutional investors and minority shareholders on certain matters stipulated in the articles of incorporation. Currently, interim dividends will also be changed to quarterly dividends to strengthen shareholder return policies.

Following Korea Zinc's press conference, a more intense vote battle is expected at the upcoming extraordinary shareholders' meeting. On the 1st, MBK and Youngpoong submitted an application for permission to convene an extraordinary shareholders' meeting to the Seoul Central District Court, with a hearing scheduled for the 27th.

Meanwhile, attention is focused on whether MBK and Youngpoong, who had acquired additional shares after the public tender offer, will seek to secure more shares to reduce variables in the vote battle. Previously, MBK Partners' special purpose company (SPC), 'Korea Corporate Investment Holdings,' acquired an additional 1.36% stake (282,366 shares) from the 18th of last month to the 11th of this month. As a result, MBK and Youngpoong's stake in Korea Zinc amounts to 39.83%, including 6.68% held by Korea Corporate Investment Holdings, 33.13% by existing Youngpoong and the Jang family, and 0.02% through Youngpoong's public tender offer.