Yeongpung·MBK File Derivative Suit Against Directors of Korea Zinc... 700 Billion Won Compensation Claim

Youngpoong and MBK Partners have filed a shareholder derivative lawsuit seeking approximately 700 billion KRW in damages against the directors who resolved the tender offer for treasury shares and the general public paid-in capital increase of Korea Zinc.

According to the legal and related industries on the 14th, Youngpoong recently submitted a complaint for a shareholder derivative lawsuit to the Seoul Central District Court, claiming that the directors of Korea Zinc failed to fulfill their duty of care and caused damage worth approximately 673.209 billion KRW to the company, and therefore must pay compensation to the company for that amount. A shareholder derivative lawsuit is filed by shareholders on behalf of the company to hold directors accountable and recover damages when the company neglects to pursue responsibility against its directors. If the plaintiff (shareholder) wins, the compensation goes to the company, not the plaintiff.

Youngpoong and MBK Partners, who filed the lawsuit, argue that the Korea Zinc board of directors conducted a tender offer to repurchase Korea Zinc shares at 890,000 KRW per share, while the shares were worth about 560,000 KRW per share, acquiring a total of 2,040,300 treasury shares. As a result, the company suffered damages equivalent to the difference multiplied by the number of shares. However, this does not include interest expenses on commercial paper (CP), corporate bonds issued to finance the tender offer for treasury shares, and loans borrowed from financial institutions.

Among the 13 members of the Korea Zinc board, 10 directors, including Chairman Choi Yoon-beom, were sued. Directors who opposed the tender offer and paid-in capital increase or who consecutively did not attend board meetings were excluded.