Korea Zinc secures court win against top investor before annual general meeting

Korea Herald

27-03-2025

A South Korean court has ruled in favor of Korea Zinc's efforts to stop its largest investor from voting at a keenly awaited annual shareholder meeting, a boost for Chief Executive Yun B. Choi's effort to retain control over the metals giant.
The Seoul Central District Court said in a statement on Thursday that it had rejected an injunction from Young Poong, a decision that hampers efforts by the group and private equity backer MBK Partners to topple Korea Zinc's board at the Friday's investor gathering, and raises the heat in a months-long corporate battle.
With Young Poong blocked from using its 25.4 percent stake, the allies will be left with only MBK's 15.83 percent voting share. That means Choi and his allies, holding about 35 percent, will be in a position to counter any challengers and strengthen their grip on the board.
The world's biggest producer of refined zinc has been caught in a messy shareholder battle since Young Poong and MBK launched a takeover bid for the company six months ago, setting off a scramble for control. A make-or-break shareholder meeting earlier this year ended in disarray after Choi used one of Korea Zinc's units to buy shares in Young Poong, thereby creating a cross-shareholding structure and barring the investor from voting its stock.
Initially, the court ruled in Young Poong's favor, prompting Choi to make a second attempt to block the company from voting using a similar tactic. This time, however, the court accepted Choi's move.
The setback for Young Poong and MBK is also a blow for shareholder activism in Asia's fourth-biggest economy, long penalized by international investors for its shaky corporate governance and opaque structures.
Young Poong shares closed down 9.1 percent in Seoul after the news, while Korea Zinc settled 1.2 percent lower. Korea Zinc, Young Poong and MBK were not immediately available for comment.
MBK and Young Poong teamed up in September to make an unsolicited offer, which was rapidly rejected. They accused Choi of ignoring shareholders' rights and loading the company with debt, accusations Korea Zinc has repeatedly dismissed.
Korea Zinc's management rushed to push back, first with a share buyback and then with a last-minute share issue, later scrapped under regulatory pressure and described by Choi as a 'tactical error.'
At the Friday's meeting, Korea Zinc has proposed capping the board at 19 members. If shareholders reject the cap, they will vote on adding either 12 or 17 directors. Korea Zinc nominated up to seven candidates, while Young Poong and MBK put forward 17 nominees.
Proxy advisory firms, including the Institutional Shareholder Services Inc. and Police Investigations and Review Commissioner, have supported the 19-member cap but offered mixed views on director candidates.
Glass Lewis, which previously backed all Korea Zinc-nominated candidates, criticized the recent developments as a 'blatant entrenchment tactic that seemingly prioritizes management control over the fair exercise of shareholder rights.'
PIRC opposed all 17 candidates from the Young Poong-MBK alliance, while supporting all nominees and agenda items from Korea Zinc.
The battle has drawn headlines and attention well beyond Korea's boardrooms. Including affiliates, the company accounts for 12 percent of the world's zinc production outside China, a key metal for applications such as electric vehicle batteries. It is also a major supplier of lead and silver, playing a crucial role in global efforts to reduce reliance on China for critical minerals. (Bloomberg)