MBK·Yeongpung "Choi Yunbeom·Korea Zinc Board Must Immediately Cancel Treasury Shares"

MBK Partners and Youngpoong stated on the 9th that "Chairman Choi Yoon-beom of Korea Zinc and the board of directors have resolved to strategically cancel shares, and the company must immediately cancel the 2,539,726 treasury shares currently held, including 9.9% of treasury shares acquired through a tender offer (12.3% of the total issued shares)."

On the same day, MBK and Youngpoong said in a press release, "It has been over 50 days since the company borrowed about 2 trillion won to conduct a tender offer for treasury shares on the premise of cancellation, but the company has still not executed the cancellation of treasury shares. This has led to continuous speculation in the market that 'Chairman Choi might unfairly use the employee stock ownership association or the employee welfare fund to defend his management rights.' There are even predictions that voting rights could be revived through securities lending transactions to engage in proxy battles at the extraordinary general meeting. Chairman Choi must immediately fulfill his promise to cancel the treasury shares."

Treasury shares do not have voting rights, but if disposed of to a third party, the voting rights are restored. However, to prevent misuse as a management defense tool, treasury shares cannot be disposed of within six months after acquisition. Securities lending is a transaction where the stock owner lends shares to a borrower for a certain period, and in this case, the borrower exercises the voting rights. If Korea Zinc lends treasury shares to Chairman Choi’s friendly forces through securities lending and revives voting rights, Chairman Choi’s side could use this at the shareholders’ meeting.

A representative from MBK and Youngpoong said, "Since securities lending of treasury shares also counts as disposal of treasury shares, it would violate the restriction period on disposal of treasury shares under the Capital Markets Act. This could lead to criticism, and the securities firms involved in the transaction and the counterparties could also face allegations of collusion in illegal securities lending. Above all, since these treasury shares were promised to be canceled through board resolutions and court proceedings, if they are not canceled and instead used for Chairman Choi’s personal management defense, it will once again draw criticism from the market and shareholders."

This content was produced with the assistance of AI translation services.