2 weeks Ago By [email protected](KoreaTimes)
Korea Zinc Chairman Choi Yun-beom, left, and Young Poong adviser Chang Hyung-jin / Courtesy of each company By Lee Kyung-min Korea Zinc, locked in a feud against the Young Poong and MBK Partners alliance over managerial control of the zinc smelter, said Monday that the firm and its ally Bain Capital, a private equity firm, have secured about 2.33 million of its shares, only about half of the over 4.14 million shares sought.
The Young Poong alliance in response said many shareholders opposed Korea Zinc Chairman Choi Yun-beom’s shares buyback effort, as evidenced by low subscription rates to the Choi-engineered tender offer. The shareholders’ judgment is appreciated, it added, as it helps mitigate significant harm to Korea Zinc’s financial stability. The alliance is the largest shareholder of Korea Zinc.
Observers say the ongoing buyout feud will escalate, since neither will hold a majority stake upon Choi’s cancellation of the newly purchased shares. Each side will hold a stake in the low-40 percent range. Read More Korea Zinc ownership battle expected to escalate into contest over voting rights MBK, Young Poong express dismay over court ruling on Korea Zinc According to the publicly disclosed data, Korea Zinc secured over 2.
04 million, or 9.85 percent of the firm’s shares. These together with 291,272 shares secured by Bain Capital raises the total to 11.
26 percent. Choi initially sought to secure a total of 4,140,657 shares of Korea Zinc at a per share price of 890,000 won ($670) in a tender offer, thereby acquiring about 20 percent of the shares. However, not as many shareholders subscribed to the latest offer after the Young Poong alliance had already secured a 5.
34 percent stake in its tender offer that concluded Oct. 14. The move to restore Korea Zinc’s distressed governance was seconded by many shareholders, the alliance said in a statement.
“Many shareholders opted out of Choi’s tender offer, despite his offer being 60,000 won higher than ours. It is clear that many prioritized long-term value over short-term profits. We urge Korea Zinc’s management to promptly repay funds borrowed for share purchase to limit losses and uphold shareholders' collective opinions," it said.
The alliance said it will organize an extraordinary shareholders meeting to enhance the corporate governance of Korea Zinc. "We as a responsible major shareholder will continue sincere communication with our shareholders, the employees and unionized workers of Korea Zinc, its affiliates, partners and the local community," it said. Meanwhile, the alliance said Choi’s potential attempt to sell the 2.
41 percent stake purchased this year to the Korea Zinc employee stock ownership entity to secure voting rights harms the firm and therefore constitutes a breach of trust, as inferred from the Supreme Court precedent. “The top court’s case on Kia ruled that a firm’s management using corporate funds to help its employees increase holdings of company shares is an act of breach of trust, if the purpose was to secure allied shareholders rather than to bolster employee welfare," the alliance said. MBK joined forces last month with Young Poong to buy out Korea Zinc.
Young Poong adviser Chang Hyung-jin initiated the buyout on Sept. 12, enraged by Choi’s efforts to seek independence from him. The alliance said it will organize an extraordinary shareholders meeting to secure managerial control.
The alliance has notified Korea Zinc's board of the extraordinary shareholders' meeting to appoint 14 new directors and to alter company policy to implement an executive officer system. “The current board has long failed as an independent oversight entity. We will reorganize the board with newly appointed directors to best reflect the needs and demands of all shareholders," it said.
The move seeks to replace 12 Choi loyalists out of the 13 current board members. The remaining one is Chang. The alliance also aims to install executive officers, including chief executive officer, a chief financial officer and a chief technology officer, streamlining the decision-making process.
“Effective oversight and supervision of management is all but impossible under the current system, since most board members are nothing more than rubber stamps. The status quo must be abandoned to prevent the unchallenged reign of Choi," the alliance said..
