[The Editors' Verdict] Young Poong Advisor Visits Memorial Altar of Korea Zinc Honorary Chairman

Jang Hyungjin, advisor at Young Poong, made an appearance at the memorial altar for Choi Changgeol, Honorary Chairman of Korea Zinc, who passed away on October 6. In the midst of the ongoing management rights dispute at Korea Zinc, it was a notable scene to see Advisor Jang, a key figure in the Young Poong-MBK alliance, visiting the memorial. On October 7, shortly after the memorial altar was set up, Advisor Jang paid his respects to the late chairman and exchanged greetings with Choi Yoonbum, Chairman of Korea Zinc. It is reported that only brief words were exchanged during this encounter.

The mere fact that these two, who frequently clashed at board meetings, met following the passing of the honorary chairman carries significant meaning. The reason their meeting drew attention is that the management rights dispute between Korea Zinc and Young Poong has continued for over a year. While both sides are fiercely attacking each other, the outcome remains unpredictable.

The conflict between the Jang and Choi families intensified when Young Poong joined forces with private equity fund MBK in September last year to secure management control of Korea Zinc. Even before then, the two sides had clashed over issues such as dividend expansion and new share issuance. Tensions escalated further when Korea Zinc decided to halt the renewal of joint contracts with Young Poong, such as those for raw material purchases. The conflict became uncontrollable after Young Poong brought in MBK as an ally. Within the business community, the prevailing sentiment was that "they have crossed the point of no return."

Looking at the shareholdings of both sides, it seems unlikely that the fight will end in a landslide victory for either party. The main reason is that it is difficult for either side to secure a majority of voting rights. When Young Poong and MBK formed their alliance last year, the Jang family's stake in Korea Zinc stood at 33.1%, higher than the Choi family's 15.6%. Both sides have since fought fiercely to increase their stakes and engaged in proxy battles, but neither managed to secure a majority. The same situation occurred at the shareholders' meeting in March this year.

As the dispute has dragged on for over a year, it has shifted from a battle for management rights to a mudslinging contest. Just last month, Young Poong and Korea Zinc accused each other of "damaging shareholder value" and "undermining corporate value." However, these attacks only exposed each other's weaknesses and left both sides wounded without any real gain.

Furthermore, the amendment of the Commercial Act has made the Korea Zinc management rights dispute even more unpredictable. At the Korea Zinc shareholders' meeting in January this year, agenda items such as cumulative voting and the 3% rule were passed. A bill requiring the mandatory cancellation of treasury shares, known as the "stronger Commercial Act," has also been proposed and is pending in the National Assembly. Since the ruling party, which holds an overwhelming majority, is pushing for the bill, the likelihood of its passage is high. Cumulative voting and treasury share cancellation are closely linked to director replacement and management control defense, and will have a direct impact on the dispute between the two sides. Not just next year, but for several years to come, the battle of wits at Korea Zinc's shareholders' meetings is expected to intensify, even more so than the battle over shareholdings.

Unfortunately, with neither side able to secure a decisive advantage, there is no sign that the attacks on each other will stop. The two sides remain divided on the fundamental issue of whether to recognize Chairman Choi's management rights.

The attention paid to Advisor Jang's visit to pay respects to the late honorary chairman stems from a faint hope that this could offer a chance for reconciliation. Korea Zinc's rise to become the world's leading zinc and lead smelting company was made possible by the spirit of partnership between the Jang and Choi families. It is said that Lee Jaejoong, Vice Chairman of Korea Zinc, saw Advisor Jang off after his visit to the memorial. From a business perspective, the status of the smelting industry in the global supply chain has also risen. Is it still too much to hope for a compromise between the two sides?