Young Poong and MBK Oppose Korea Zinc's U.S. Smelter Plan: "Immediate Injunction to Prohibit New Share Issuance"

"Damaging Shareholder Value and Undermining Financial Stability"

Young Poong, the largest shareholder of Korea Zinc, and MBK Partners announced on December 15 that they plan to file for an injunction to prohibit the issuance of new shares, stating that the push to build a smelter in the United States is "a serious matter that could undermine shareholder value and worsen financial stability."

In a press release issued the same day, Young Poong and MBK Partners claimed, "The Korea Zinc board of directors, which is dominated by directors aligned with Chairman Choi Yoonbum, hastily approved large-scale overseas investments and changes to the corporate governance structure without sufficient review or social explanation procedures during a period of management dispute." They added, "We deeply regret that we were only partially informed of these facts at the board meeting itself. This represents a serious procedural breach that undermines the function of the board."

On this day, Korea Zinc's board of directors decided to build an integrated non-ferrous metal smelter in Tennessee, United States, with an investment of 11 trillion won. The local joint venture (JV) to be established for this purpose will include participation from the U.S. Department of Defense (formerly the War Department), the Department of Commerce, and private companies.

Regarding this, Young Poong and MBK Partners stated, "Korea Zinc has chosen a highly unusual method by creating a JV funded by the U.S. government and private companies, and then having this JV participate in a third-party allocation paid-in capital increase of Korea Zinc." They continued, "It is difficult to dispel reasonable suspicions that such a complex indirect investment structure is not aimed at fundraising, but rather at intervening in corporate governance to secure friendly shares amid a management dispute."

They further asserted, "As a result, this JV will be able to secure approximately 10% of Korea Zinc's shares without bearing substantial business risk, thus gaining influence over dividends and decision-making structures." "A capital increase involving a non-transparent share transfer structure that sacrifices existing shareholders does not meet management needs and is in direct violation of the principle of shareholder equality," they said.

They also emphasized, "This paid-in capital increase infringes on shareholders' preemptive rights and constitutes an illegal act that causes significant damage to the company. We will take all necessary legal action to correct this decision and ensure that Korea Zinc remains a company trusted by shareholders, partners, and the national industry as a whole, rather than the private property of Chairman Choi Yoonbum."