Young Poong and MBK Partners expressed regret after their request to prohibit Korea Zinc's third-party paid-in capital increase was dismissed.
On December 24, Young Poong and MBK Partners, the largest shareholders of Korea Zinc, issued a statement saying, "We express our disappointment regarding the court's decision to dismiss the injunction to prohibit the issuance of new shares."
They stated, "We regret that it is difficult to consider the concerns raised during this process-such as the potential damage to existing shareholders' value, the fairness of the investment agreement, and the financial and managerial risks that Korea Zinc will bear in the mid- to long-term-as having been fully resolved. We want to make it clear that these issues were raised out of a sense of responsibility as the largest shareholders, with the intention of ensuring Korea Zinc's sustainable growth and protecting the interests of all shareholders."
They continued, "Nevertheless, as the largest shareholders of Korea Zinc, Young Poong and MBK Partners intend to support Korea Zinc's U.S. smelter construction project so that it can deliver tangible 'win-win' results not only for the United States but also for Korea Zinc and the broader Korean economy."
The Young Poong and MBK Partners side added, "For large-scale overseas strategic projects to proceed stably, a governance and decision-making system must be in place that enables the management to secure ongoing trust and support from the board of directors and the largest shareholders. Going forward, Young Poong and MBK Partners will make every institutional and legal effort to ensure that Korea Zinc's management is focused on maximizing the long-term value for all shareholders and the company, rather than serving the interests of specific individuals or short-term gains."
On this day, the Civil Agreement Division 50 of the Seoul Central District Court (Presiding Judge Kim Sanghun) dismissed the injunction request filed by Young Poong and MBK Partners against Korea Zinc to prohibit the issuance of new shares.
Previously, on December 15, Korea Zinc held a board meeting and gave final approval to the investment plan for constructing an integrated non-ferrous metal smelter in the United States and the agenda for a third-party paid-in capital increase.
Korea Zinc plans to establish a joint venture with the U.S. government and the defense industry to build the smelter. The total amount to be contributed by both the U.S. side and Korea Zinc through the joint venture is approximately 2.86 trillion won (1.94 billion dollars), which will be used for Korea Zinc's third-party paid-in capital increase. Korea Zinc will secure this amount, and the joint venture will own 2,209,716 shares of Korea Zinc common stock.
Once the paid-in capital increase is completed, the joint venture will acquire about 10% of all Korea Zinc shares. Consequently, the stake held by Young Poong and MBK Partners will decrease to around 40%. The stake held by Chairman Choi Yunbum will also fall to 29%, but when combined with the joint venture's stake, it will rise to 39%.
In response, Young Poong and MBK Partners filed for an injunction to prohibit the issuance of new shares, arguing that the new share issuance was aimed at defending Chairman Choi's management control.
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