Latest news with #YoungPoong
Korea Herald
02-04-2025
- Business
- Korea Herald
MBK chief tries damage control amid Homeplus setback
MBK Partners, under pressure from the Homeplus debacle and a contentious management battle over Korea Zinc, sought to downplay the severity of the situation in its annual letter to investors, according to industry sources on Wednesday. Each year, MBK Partners Chairman Michael Byung-ju Kim sends a letter to the firm's limited partners, highlighting key achievements and investment strategies. This year's letter was distributed on March 24. 'Homeplus, one of our oldest and largest investments, filed for rehabilitation proceedings in early March,' Kim acknowledged in the letter, explaining that the move was prompted by a liquidity crunch following the retailer's credit rating downgrades. 'It is worth noting that under rehabilitation protection, MBK Partners will remain in control of operations as we seek to salvage meaningful value from our equity interest,' he added. The private equity giant has found itself in a difficult position amid criticism over the rehabilitation of the troubled hypermarket chain, with detractors accusing the firm of shirking responsibility in the face of the bankruptcy. Adding to the controversy, Korea's top financial regulator, the Financial Supervisory Service, announced Tuesday that it had uncovered 'circumstantial evidence' suggesting MBK was involved in issuing short-term bonds for Homeplus while simultaneously preparing for its rehabilitation behind the scenes. However, Kim appeared to brush aside the mounting scrutiny, characterizing the situation as 'some noise' in the media. 'We are committed to the welfare of all stakeholders, and we have announced measures to take 'societal responsibility,' including personal contributions,' he wrote, referencing his pledge to use personal assets to help resolve the crisis. In the letter, Kim also addressed the firm's attempt to acquire Korea Zinc, the world's largest zinc smelter based in Korea. 'What is frequently overlooked is that the transaction is about governance reform, which aligns with the government's CVP (Corporate Value-Up Program) initiative,' he wrote. Although MBK challenged Korea Zinc Chair Choi Yun-beom's management rights in a proxy battle — teaming up with the smelter's major shareholder and former ally turned rival, Young Poong — Choi ultimately retained control of the company. Choi secured approval for key agenda items at the company's general shareholders' meeting held on March 28. MBK and Young Poong have since announced plans to legally challenge the outcome.
Korea Herald
30-03-2025
- Business
- Korea Herald
Korea Zinc chair triumphs in management rights defense
Korea Zinc Chair Choi Yun-beom successfully defended his management rights in a proxy battle against major shareholder Young Poong and private equity firm MBK Partners, retaining a majority of board seats. However, with MBK planning to challenge the results of the shareholders meeting, the dispute ongoing for the last seven months is likely to continue. At the general shareholders meeting Friday, Choi secured approval for key agenda items, including capping the number of directors at 19 and appointing five new directors backed by his faction. "Many shareholders and the public have expressed strong support for protecting Korea Zinc, a vital national industry, from hostile acquisition threats," a Korea Zinc official said. "We will strive to meet the expectations of our shareholders and the public while continuing to ensure Korea's resource security and playing a central role in the global strategic mineral supply chain." Korea Zinc is one of the world's largest zinc smelters, producing high-purity zinc using advanced technology. The firm's current management gained an advantage in the voting process by limiting Young Poong's voting power through a cross-shareholding structure, acquiring Young Poong shares via its wholly owned Australian subsidiary, Sun Metals Holdings, just before the meeting. Before this maneuver, Young Poong and MBK held a combined 40.97 percent stake in Korea Zinc, while Choi controlled 34.35 percent. Following the latest board changes — factoring in existing directors and excluding four suspended directors aligned with Choi — his faction holds 11 seats, while his proxy rival controls four. The agenda to establish an upper limit on the number of directors aims to cap the currently unlimited Korea Zinc board at 19, a proposal by Choi to thwart Young Poong's plan to introduce 17 new directors. At the next shareholders meeting, the MBK alliance's stake will increase to 41.25 percent, while Choi's will drop to around 30 percent. This change follows Young Poong's transfer of its 25.42 percent stake to YPC Limited, a newly established firm, in order to circumvent cross-shareholding restrictions. However, with the director cap in place, even if MBK and Young Poong appoint four additional directors, securing a board majority will be challenging. To remove the cap on the number of directors, more than two-thirds of shareholder approval is required, making such a move virtually impossible. The same threshold applies to the dismissal of directors. As a result, MBK and Young Poong will be engaged in a prolonged proxy battle, contesting board seats as each director's term expires, which could take at least two years for them to gain full control. "We will immediately appeal and suspend the results of the regular shareholders meeting, which were distorted due to restrictions on Young Poong's voting power, and we will rectify the distorted shareholders' will in court," the alliance stated Friday. MBK and Young Poong are also expected to file a lawsuit over concerns of insider trading linked to the stock purchase process of Sun Metals Holdings. Korea Zinc, co-founded in 1974 by Chang Byung-hee and Choi Ki-ho, has been under the management of the Choi family, while the Chang family oversees Young Poong Group and its electronic parts affiliates. Since Choi Ki-ho's grandson, sitting Chair Choi Yun-beom, took office in 2022 and expressed his intention to separate the company from Young Poong, the two families have been embroiled in a battle for control of Korea Zinc.
Korea Herald
27-03-2025
- Business
- Korea Herald
Korea Zinc secures court win against top investor before annual general meeting
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)
Korea Herald
14-03-2025
- Business
- Korea Herald
Korea Zinc faces high-stakes shareholders' meeting amid proxy battle
Korea Zinc, the world's largest zinc smelter, is preparing for a pivotal general shareholders' meeting later this month amid an ongoing proxy battle with its major shareholder Young Poong and private equity firm MBK Partners. Korea Zinc has scheduled its regular shareholders' meeting for March 28 with seven agenda items, including setting a cap on the number of directors, appointing an outside director as chairman of the board, and introducing quarterly dividend payments. The upcoming meeting is set against the backdrop of an ongoing dispute that began in late 2024 when the Young Poong-MBK alliance sought greater influence over Korea Zinc's management. The MBK faction holds a 40.97 percent stake in Korea Zinc, compared to a 34.35 percent held by Korea Zinc Chairman Choi Yun-beom and his allies. The shareholder proposals put forward by Korea Zinc were again suspended earlier this month when a Seoul court accepted an injunction invalidating a resolution approved by Korea Zinc's extraordinary general meeting of shareholders on Jan. 23. 'These agenda items were all approved by the five major domestic and foreign proxy advisory firms, including Glass Lewis, ISS, the Korea ESG Institute, and Korea ESG Standards, and were approved by more than 95 percent of domestic and foreign institutional investors, including the National Pension Service and global pension funds, at the extraordinary general meeting of shareholders,' a Korea Zinc official said. Korea Zinc's board of directors currently consists of 12 members, including 11 from the firm's management side and one from its rival in the proxy fight. In addition to the existing board of directors, Korea Zinc recommended five to eight director candidates, while MBK and Young Poong requested the selection of 17 director candidates through shareholder proposals last month. 'If 17 additional directors are appointed as proposed by MBK and Young Poong, the board will become excessively large, which will weaken the responsibility and authority of the directors and place a great burden on the board's operation,' the Korea Zinc official said. The central issue influencing the upcoming shareholders' meeting is whether Young Poong, which holds a 25.42 percent stake in Korea Zinc, will have its voting rights restricted due to a newly established cross-shareholding structure. On Thursday, Korea Zinc's wholly owned Australian subsidiary, Sun Metals Holdings, said it received a 10.3 percent stake in Young Poong as a dividend-in-kind from Sun Metals Corporation, creating a cross-shareholding scenario where both companies hold significant stakes in each other. Under Korea's Commercial Act, when two companies each hold more than 10 percent of the other's shares, their voting rights in each other's shareholder meetings are restricted. Korea Zinc's management asserts that this provision applies, thereby limiting Young Poong's ability to exercise its voting rights at the forthcoming meeting. If restricted, the current management, led by Chairman Choi, is more likely to secure the passage of proposed agenda items, including amendments to the articles of incorporation and board appointments.
Korea Herald
04-03-2025
- Politics
- Korea Herald
Controversy persists over Young Poong's environmental pollution
Controversy over the environmental pollution by Young Poong, the world's sixth-largest zinc producer, has persisted despite the suspension of operations at its Seokpo refinery for discharging polluted wastewater without authorization. On Feb. 26, the Seokpo refinery in North Gyeongsang Province ceased operations for 58 days, after being ordered to do so by the Supreme Court for violating water conservation laws. The ruling upheld a 2019 administrative disposition against the refinery for illegally discharging wastewater containing heavy metals, including cadmium, into the Nakdong River. Lawmakers and environmentalists are now calling for the site's permanent closure. Rep. Kang Deuk-gu of the Democratic Party of Korea, a member of the National Assembly's Environment and Labor Committee, has urged the Ministry of Environment to revoke the refinery's environmental permit and establish a task force to oversee its closure and relocation. 'Young Poong's Seokpo refinery has violated environmental laws more than 120 times over the past decade and has been subjected to over 90 administrative measures, yet it has continued illegal operations, such as discharging wastewater without permission,' Kang stated at a press conference alongside local civic groups on Feb. 26. Located in the uppermost reaches of the Nakdong River, he says the refinery poses a serious threat to the health of residents who rely on the river for drinking water. 'It seems that Young Poong has no real plans to address the decadeslong environmental pollution or to improve the health of workers and residents,' he said. Several civil groups, including the Asian Citizen's Center for Environment and Health and the Korea Federation for Environmental Movements, have called on the National Assembly and the North Gyeongsang Provincial Government to establish a road map for the refinery's permanent closure within two months. 'The wastewater discharge from Young Poong's Seokpo Smelter has resulted in high concentrations of heavy metal contamination at Andong Dam, located 60 kilometers downstream,' said Ahn Sook-hee, an activist with the Korean Federation for Environmental Movements, during a press conference on Feb. 25. Environmental groups said pollutants from the Seokpo site have significantly contaminated the upper Nakdong River, and cleaning up the sediment at Andong Dam would require an enormous financial investment. 'We must put an end to the situation where the Seokpo plant profits while taxpayers bear the cost of the cleanup,' they said. The suspension of the Seokpo refinery's operations is expected to negatively impact Young Poong's ongoing bid to secure management rights over Korea Zinc, the world's leading zinc producer. Young Poong has been engaged in a fierce battle to acquire a controlling stake in Korea Zinc, launching a multibillion-dollar tender offer in partnership with Seoul-based private equity firm MBK Partners. There is growing debate over whether Young Poong should pursue the acquisition while unresolved environmental issues persist at its own facilities. Meanwhile, a court recently ruled that the Ministry of Environment was legally justified in imposing a 28.1 billion won ($19.3 million) fine on Young Poong for leaking cadmium into the Nakdong River during the operation of the Seokpo smelter. On Feb. 27, the Seoul Administrative Court ruled against Young Poong in a lawsuit seeking to overturn the fines imposed by the Ministry of Environment. The court highlighted that cadmium concentrations in groundwater inside the premises of the Seokpo smelter and in the river water outside significantly decreased after the company reinforced the lower floor of its facility. 'This proves that cadmium was leaking from the smelter until Young Poong took corrective measures,' the court stated. The Ministry of Environment originally imposed the fine in November 2021, citing cadmium leakage from the Seokpo plant into the Nakdong River between April 2019 and April 2021. In this case, seven current and former Young Poong executives and employees, including a former CEO, were indicted on charges of violating the Water Environment Conservation Act. However, they were all acquitted in the first trial in November last year. 'Even if a criminal trial results in acquittal, the violation itself does not disappear,' the court ruled. 'Unlike criminal penalties, administrative sanctions for legal violations can be imposed even in the absence of intent or negligence by the violators.'
