Korea Zinc says rivals must stop filing baseless claims to courts
Company urges end to 'wasteful' legal battles draining shareholder resources
Korea Zinc called on MBK Partners and Young Poong to stop filing what it described as groundless injunction bids and lawsuits aimed solely at a hostile takeover, after a court rejected all of their applications to block voting rights ahead of an extraordinary shareholders' meeting.
According to industry sources and Korea Zinc, the Seoul Central District Court's 50th Civil Division on Thursday dismissed all injunction applications filed by Korea Enterprise Investment Holdings — the SPC established by MBK Partners to execute its hostile takeover of Korea Zinc — and Young Poong. The applications had sought to block voting rights held by shareholders aligned with Korea Zinc Chairman Choi Yun-beom and by Pi23 Partners. The court also ordered Korea Enterprise Investment Holdings and Young Poong to bear the litigation costs.
MBK and Young Poong had alleged that Korea Zinc's current management made false disclosures or omitted material information about lenders and collateral counterparties when Pi23 Partners acquired 419,082 Korea Zinc shares from Troika Drive Investment. On that basis, they sought to have voting rights restricted for shares held by Pi23 Partners and Korea Zinc's current management at Wednesday's extraordinary shareholders' meeting.
The court, however, found it could not accept the core premise of MBK and Young Poong's argument. The panel said it was difficult to conclude that the "lender" entry in a large-shareholding report constitutes a "material matter" subject to voting-rights restrictions under the Capital Markets Act. The court reasoned that the mere fact that share-acquisition funds were raised through borrowing does not, by itself, indicate a change in a shareholder's holdings or in control of Korea Zinc.
The court also found it difficult to treat the initial report's listing of Meritz Securities as the collateral counterparty as a false statement. Meritz Securities signed and sealed the contract directly as both the loan arranger and the collateral agent, and also performed some functions on behalf of the lending syndicate — including establishing, managing and enforcing the pledge.
The court likewise rejected MBK and Young Poong's claim that investors had been given a misleading picture of the financing structure. It noted that the initial report had already stated the loan was concluded "with lenders including Meritz Securities," and that the loan amount, interest rate, number of pledged shares, collateral ratio and contract term had all been disclosed in detail. The court also said it took into account that a corrected report adding the specific composition of the lending syndicate was filed just seven days after the initial filing.
The panel therefore concluded it could not determine that Korea Zinc's current management had intended to falsely record or omit information about the collateral counterparty or lender. It added that the right to be preserved — a prerequisite for an urgent voting-rights restriction at the injunction stage — had not been sufficiently demonstrated.
Earlier, in April, MBK and Young Poong also lost a separate injunction case related to Korea Zinc's regular shareholders' meeting held in March 2025 — the foundation of the current management structure — receiving a final rejection from the Supreme Court.
A Korea Zinc official said repeatedly abusing judicial procedures as a tool for a hostile takeover, by leading with sensational allegations without sufficient grounds, wastes not only the court's time but also the company's and shareholders' resources. "We hope MBK and Young Poong will stop sowing confusion among the market and shareholders through groundless allegation-driven public campaigns, and instead focus on supporting Korea Zinc's development in a manner befitting their role as investors," the official said.
The official added that the company plans to hold Wednesday's extraordinary shareholders' meeting "fairly and transparently in accordance with relevant laws and principles," and expressed hope that the market and shareholders would make rational judgments based on candidates' expertise and independence, as well as Korea Zinc's medium- and long-term growth and shareholder value, rather than being swayed by draining legal disputes or one-sided claims.
Korea Zinc is scheduled to hold the extraordinary shareholders' meeting at 10 a.m. Wednesday at the Mondrian Hotel in Yongsan-gu, Seoul. The agenda items are: an amendment to the articles of incorporation to expand the number of separately elected audit committee members, the election of four directors by cumulative voting, and the election of an independent director to serve as an audit committee member.
likehyo85@heraldcorp.com
