Yeongpung·MBK "Korea Zinc Should Resell Yeongpung Shares Bought from Affiliates"

Demand for Restoration of Yeongpung Shares Purchased to Restrict Voting Rights
"Profit Earned from 57.5 Billion KRW Acquisition Should Remain with the Subsidiary"

Yeongpung and MBK Partners have demanded that the Australian affiliate dispose of Yeongpung shares acquired by it from Choi Yoon-beom, chairman of Korea Zinc, who is engaged in a management rights dispute. Since the court ruled that restricting the opposing party's voting rights through a limited liability subsidiary under the Commercial Act's 'mutual share restriction' method is illegal, they insist that the situation must be restored to its original state.

On the 10th, Yeongpung and MBK announced this position. The Seoul Central District Court judged that Korea Zinc's restriction of voting rights corresponding to 25.4% of Yeongpung shares, the largest shareholder of Korea Zinc, through its limited liability subsidiary, Sun Metal Corporation (SMC), was unfair, and therefore it must be restored to its original condition.

Yeongpung and MBK stated, "The acquisition amount of Yeongpung shares, 57.5 billion KRW, is more than half of SMC's average annual facility investment of 106.8 billion KRW over the past five years (2019?2023)." They criticized, "SMC, which has turned to a deficit, used a large amount of funds for facility maintenance to acquire Yeongpung shares unrelated to its core business." They added, "Since the court ruled that Chairman Choi's side's attempt was illegal, the transaction in which SMC acquired Yeongpung shares, which was the starting point, must be immediately restored to its original state." They further stated, "When restoring to the original state, the profit that Chairman Choi's side claims SMC gained by trading at Yeongpung's current market price should remain with SMC."

Earlier, on January 23, the day before Korea Zinc's extraordinary general meeting, Chairman Choi's side had the subsidiary SMC purchase about 10.3% of Yeongpung shares from Yeongpung Precision and the Choi family for approximately 57.5 billion KRW. Through this, a circular shareholding structure was created: Korea Zinc → SMC → Yeongpung → Korea Zinc, and the voting rights of Korea Zinc's shares in Yeongpung were blocked by the mutual share voting rights restriction method. According to Article 369, Paragraph 3 of the Commercial Act, if Company A holds 10% or more of Company B's shares alone or through subsidiaries or limited liability subsidiaries, the shares of Company A held by Company B lose their voting rights.

The temporary shareholders' meeting of Korea Zinc is being held on the afternoon of the 23rd at the Grand Hyatt Seoul in Yongsan-gu, Seoul. Photo by Jo Yong-jun