Yeongpung·MBK "Korea Zinc's Disposal of Hanwha Shares Constitutes Breach of Fiduciary Duty"

Initiation of Shareholder Derivative Lawsuit Procedures
Against Chairman Choi Yoon-beom and CEO Park Ki-duk

Yeongpung and MBK Partners announced on the 5th that they have decided to initiate procedures to file a shareholder derivative lawsuit against Chairman Choi Yoon-beom and CEO Park Ki-duk regarding last year's sale of Korea Zinc's shares in Hanwha Co., Ltd.

Previously, in November of last year, Korea Zinc sold all of its 7.25% stake in Hanwha Co., Ltd., which it held, to Hanwha Energy through an off-hours block trade at 27,950 KRW per share. It is estimated that this resulted in a loss of 4.9 billion KRW compared to the price Korea Zinc paid two years ago when it acquired the Hanwha shares through a stock swap, which was about 3% higher.

Yeongpung and MBK stated, "If Korea Zinc had responded to Hanwha Energy's tender offer to purchase Hanwha Co., Ltd. shares at 30,000 KRW per share about four months before the transaction and disposed of the shares then, it would have gained approximately 11 billion KRW in profit instead of a 4.9 billion KRW loss compared to the purchase price," adding, "they caused significant financial damage to Korea Zinc and its shareholders by selling shares that should have commanded a premium to Hanwha Energy at a bargain price."

Furthermore, Yeongpung and MBK pointed out, "Despite the disposal of Hanwha Co., Ltd. shares being a large-scale asset disposal exceeding 100 billion KRW, the board of directors' procedures were omitted, raising concerns that the management errors made during the original Asia Fund investment are still being repeated," adding, "In particular, it is inconsistent to claim that a board resolution was necessary when acquiring Hanwha shares but not required when disposing of them."