U.S. Court Admits Evidence on Ignio Acquisition Despite Korea Zinc's Dismissal Request

Request to Cancel Korea Zinc's Discovery Approval Dismissed
Possibility of Securing Evidence Related to High-Priced Acquisition

A U.S. court has rejected the request from Choi Yoonbum, Chairman of Korea Zinc, to withdraw the admission of evidence related to suspicions of an overpriced acquisition of Ignio Holdings. This development raises expectations that Young Poong, the largest shareholder of Korea Zinc, will be able to secure crucial evidence in the United States for the ongoing shareholder derivative lawsuit against Korea Zinc’s board of directors.

On the 24th, Young Poong announced that on the 19th (local time), the U.S. District Court for the Southern District of New York made this decision. The court fully dismissed Korea Zinc’s request to cancel and nullify the order permitting discovery against Korea Zinc’s U.S. subsidiary, Pedal Point Holdings. As a result, the previously granted discovery order remains in effect.

The court rejected all grounds for dismissal raised by Pedal Point. The court determined that Pedal Point had failed to prove that Young Poong’s standing as a party in the Korean shareholder derivative lawsuit was not maintained. It also ruled that Young Poong qualifies as an “interested party” and that the discovery in question could be relevant to the Korean shareholder derivative lawsuit.

This case is part of a shareholder derivative lawsuit alleging that Korea Zinc’s management made the decision to acquire Ignio, an e-waste recycling company in a state of capital impairment, through its U.S. subsidiary Pedal Point, without rational justification.

In 2022, Chairman Choi, acting as Korea Zinc’s management representative, decided to acquire Ignio, which was in a state of complete capital erosion, for approximately 580 billion won. There are suspicions that the acquisition price was excessive, causing losses to the company and its shareholders, while providing the seller with profits amounting to 100 times their investment.

With this U.S. court decision, Young Poong has obtained the legal authority to secure documents, emails, internal evaluation materials, negotiation records, and testimonies related to the Ignio acquisition from Pedal Point and its executives in the United States. This could provide clues as to whether Korea Zinc’s management made the decision to acquire Ignio based on appropriate procedures and justifications in the Korean shareholder derivative lawsuit. The first hearing for the Korean shareholder derivative lawsuit is scheduled for January 29 next year.

A Young Poong representative stated, “This ruling is an internationally recognized example of our legitimate exercise of shareholder rights and efforts to establish transparent corporate governance.”

In response, Korea Zinc commented, “The trial has concluded at the first instance, and we plan to pursue further actions such as filing an appeal and requesting a stay of proceedings. Even if discovery is ultimately granted, both parties will go through a process of selecting which information can be provided, so it does not mean that Young Poong will be able to obtain all documents.”