MBK "Reveal Relationship with Ignio Seller" vs Korea Zinc "Data Distortion" (Summary)

On the 6th, MBK Partners and Yeongpung stated, "In 2022, when Korea Zinc acquired Igneo, an absurd valuation was set," and demanded, "Chairman Choi Yoon-beom of Korea Zinc should disclose his relationship with the seller who made an enormous profit of up to 100 times during the Igneo acquisition."

MBK and Yeongpung issued a statement on the same day, saying, "This is an unusual and irrational investment, and Chairman Choi and the seller's relationship must be fully disclosed to the shareholders."

Korea Zinc acquired 100% of the existing shares and new shares of Igneo, a U.S.-based electronic waste recycling company, in two rounds in July and November 2022. The transaction amount was approximately 580 billion KRW. This was nine times Igneo's revenue in 2021.

In particular, MBK and Yeongpung claimed that the initial shareholders of Igneo earned 100 times their investment in just one and a half years. The total initial capital investment of Igneo was about 2.75 million USD (27.5 USD per share). At the time Korea Zinc acquired Igneo's existing shares in July 2022, the price per share was 2,466 USD and 2,621 USD. The transaction price in November of the same year was 2,708.7 USD per share.

The MBK and Yeongpung alliance said, "Igneo was merely a startup company established in February 2021," and added, "It is highly unusual that a non-disclosure agreement was signed and acquisition negotiations were conducted just five months after its establishment in July 2021."

The shareholders at the time of Igneo's transaction were mainly investment funds, including ▲ MCC NFT (47.5%) ▲ PCT Igneo Investor LLC (38.2%) ▲ The Tarsadia Group LLC (5.7%) ▲ Windchime Limited (5%).

MBK and Yeongpung stated, "Chairman Choi's side claims ignorance of the internal relationships among Igneo's sellers," and noted, "There is no case where the identities of the parties involved in a transaction involving hundreds of billions of KRW are disregarded."

In response, Korea Zinc said, "Igneo Holdings was a company established by MCC before the deal bidding started to consolidate business units that were divided into several corporations," and argued, "Simply calling it a startup based on the establishment year and criticizing the high purchase price shows a lack of understanding of the deal."

Korea Zinc explained, "The Igneo Holdings transaction was not conducted solely for the processing business," and added, "It was based on the premise that MCC would transfer all raw material procurement and firing business of its existing resource recycling division, as well as the new business it was preparing called Evtera, to the newly established company Igneo Holdings."

Furthermore, Korea Zinc stated, "The deal was conducted with the involvement of major U.S. law firms and investment banks (IB) for valuation and acquisition procedures," and asserted, "Therefore, the claim that Tarsadia earned more than 100 times its capital through Korea Zinc's acquisition of Igneo Holdings is not true."