Against Korea Zinc with 3兆 share purchase… Youngpoong appeals for temporary injunction for “breach of trust”

Chairman Choi’s side is starting to defend management rights
Plan to get 18% at a high price of KRW 830,000
Young Poong “The stocks you buy will go down 40%”
Youngpoong’s purchase ends tomorrow.

President Choi Yoon-beom, who runs Korea Zinc, has started buying his own shares. When the alliance of Youngpoong (Jan family) and MBK Partners tried to take over management rights through a tender offer of Korea Zinc stock, they countered with a tender offer of their own shares. In response, Youngpoong filed a request for a temporary injunction to the court to stop the related process, saying, “The intention of the board of directors of Korea Zinc to buy their shares itself an act of breach of trust which harms the interests of the company. and every shareholder.”

● Will Chairman Choi secure about 7%?

Korea Zinc held a board meeting at its headquarters in Jongno-gu, Seoul on the 2nd and decided to acquire treasury stocks through a counter offer. A counter-tender is a counter-tender strategy that buys the same stocks at a higher price in response to a tender offer that buys stock that targets a company’s management rights.

Korea Zinc and Bain Capital plan to secure 18.0% (3,726,591 shares) of all stocks by spending a total of KRW 3.1 trillion, or KRW 830,000 per share, during the counter offer period (4th to 23rd). Korea Zinc set the tender offer price per share at 830,000 won, 80,000 won higher than Youngpoong and MBK.

The focus is on whether Korea Zinc can acquire about 7% of its own shares. Excluding the stake of the National Pension Service in Korea Zinc (7.6%), which is likely to remain neutral, and the treasury stock of Korea Zinc (2.4%), if Korea Zinc acquires an additional 7% of the treasury stock, it can prevent to prevent Youngpoong and MBK from owning a majority of the stock. Currently, Chairman Choi’s share in Korea Zinc is 33.99%, while Youngpoong Advisor Jang Hyung-jin’s share is similar to 33.13%. If the Youngpoong-MBK alliance raises the tender offer price again on the 4th, the tender offer period will be extended by 10 days.

President Choi held an emergency press conference on the afternoon of the 2nd after the board meeting ended. As for setting the size of the tender offer at a maximum of 18%, he explained, “This is to ensure that around 7 to 8% of stocks will be bought.” Chairman Choi maintained his strong stance throughout ​​​​​​​meeting, saying, “I am sure that Youngpoong and MBK are not suitable management (for Korea Zinc).

● “Treasury stock value will drop by more than 40%” at Youngpoong

The Youngpoong-MBK alliance immediately protested. On this day, a complaint was filed with the Seoul Central District Prosecutors Office against the board of directors of Korea Zinc, which decided to buy its own shares. Meanwhile, a request for a temporary injunction has been submitted to the Seoul Central District Court regarding the purchase of Korea Zinc shares to prevent a breach of trust that harms the interests of shareholders.

The Youngpoong-MBK joint venture said, “The purchased financial stock cannot be sold for six months after purchase,” adding, “If the stock price of Korea Zinc returns to the previous price (about 550,000 won per share ) after the end of the tender offer, the value of the financial stock bought by Korea Zinc will be at least “It will fall more than 40%,” he said.

At the same time, he said, “Acquiring financial stocks at a price higher than their true value as a result of a tender offer price may not only be a breach of the director’s fiduciary duty but also a breach duties.”

The Youngpoong-MBK alliance also argued that “Korea Zinc’s limit on the amount of financial stock purchases is not 5.8497 trillion won, but in reality it is only 58.6 billion won.” To solve this problem, money collected through overseas investments must be used, but he said that this is a matter to be solved at the general shareholders’ meeting, not the board of directors.

With both sides competing with tender offers and counter offers, the industry expects the 4th to be a watershed. The 4th tender offer deadline is Youngpoong and MBK of Korea Zinc stock. If the existing shareholders win with Chairman Choi, who proposed 830,000, this situation is likely to be long. If Youngpoong and MBK raise the price again and start a tender offer, the ‘war of war’ between the two families over the management rights of Korea Zinc is expected to accelerate further.