MBK Partners and Young Poong, Korea Zinc’s largest shareholder, are calling for an extraordinary shareholder meeting to propose new board members, intensifying a battle for control over the company. Here are the key points:
Shareholder Meeting Call: MBK and Young Poong plan to seek approval to appoint their nominees to the board, aiming for representation that exceeds half of the 13-member board.
Current Board Composition: Currently, only one board member represents Young Poong, while MBK seeks to introduce an “executive officer” system to separate management roles from the board, potentially requiring Chairman Yun B. Choi to relinquish his management position.
Corporate Governance Concerns: Kim Kwang-il of MBK highlighted issues with Korea Zinc’s governance, suggesting that the board does not adequately consider shareholder interests and is too closely aligned with the Choi family.
Stake Acquisition: MBK and Young Poong recently acquired over 5% of Korea Zinc, raising their combined stake to nearly 39%. This move follows a tender offer that closed last week.
Counteractions by Korea Zinc: In response, Korea Zinc has launched a share buyback program and has the potential support of up to 36.5% of shareholders, including Bain Capital and Hyundai Motor Group.
Allegations of Conflict of Interest: Governance experts have criticized Korea Zinc for a $400 million investment in private equity funds linked to a friend of Choi, raising concerns about conflicts of interest and lack of board approval for such investments.
Future Steps: If Korea Zinc’s board rejects their proposal, MBK plans to seek court approval to proceed with the meeting, which could be postponed to January or February. The proposal requires majority approval from voting shareholders.
Market Reaction: Shares of Korea Zinc surged 30% on Thursday, reflecting investor anticipation of a protracted takeover struggle.