"MBK, Young Poong overinterpret audit committee reply for PR campaign"
"Arbitrary claims sowing market confusion"
"Administrative, legal procedures weaponized for hostile takeover"
"MBK, Young Poong must act responsibly as shareholders"
MBK, Young Poong say audit committee has "officially acknowledged" fund misuse allegations
Korea Zinc sharply criticized Young Poong and MBK Partners, its rivals in an ongoing management control dispute, accusing them of being "consumed by a hostile takeover bid and repeatedly making one-sided claims and distortions."
Korea Zinc said Young Poong and MBK Partners have been arbitrarily interpreting a reply from its audit committee regarding allegations of fund misuse and conflicts of interest against Chairman Choi Yun-beom, and using it as a tool to advance their hostile takeover.
In a statement Sunday, Korea Zinc said its audit committee had sent a basic reply indicating it would review the contents of the official letter before responding on the requests for an investigation and a board report. MBK and Young Poong, it said, then distributed a press release claiming "the allegations are under review" — an interpretation Korea Zinc called arbitrary — to wage a public relations campaign.
Young Poong and MBK had sent a letter to the audit committee on Oct. 13, demanding an independent investigation into the flow of funds and decision-making processes involving Choi and his family, as well as the involvement and accountability of related directors, with the results to be reported to the board.
In response, the audit committee sent a reply to Young Poong and MBK on Thursday stating that it would "thoroughly review the contents of this letter at the next audit committee meeting before responding with the committee's position on the requests for an investigation, review and board report."
Korea Zinc said Young Poong and MBK's claims "prioritize interpretations favorable to themselves over objective facts, spreading negative perceptions in the market and potentially burdening the independent judgment of the audit committee, which is an independent body." It added that it was concerned the two parties might be "using internal company procedures through directors they recommended to find material for a PR campaign."
Korea Zinc added that "distributing the audit committee's reply as a press release and steering toward a predetermined conclusion further highlights the problems we have long been concerned about," and said it was "hard to dismiss the suspicion that this approach is intended to influence the audit committee's independent judgment."
Korea Zinc also noted that MBK and Young Poong had continued the same conduct despite suffering a string of courtroom defeats in recent litigation over the very issues they had raised in the course of their hostile takeover attempt. "Repeated one-sided claims and allegations can have a negative impact on the reputation of management and on corporate value," it said.
On Thursday, the Seoul Central District Court dismissed in its entirety a shareholder derivative suit filed by Young Poong challenging Korea Zinc's tender offer for its own shares, which was conducted to defend against the hostile takeover. A separate shareholder derivative suit filed by MBK over Korea Zinc's sale of its Hanwha stake was also dismissed.
Korea Zinc urged MBK and Young Poong to "immediately stop the practice of predetermining a specific conclusion, waging a PR campaign and exerting external pressure," and called on them to "recall the basic standards of capital markets and corporate governance by respecting the independence of our audit committee." It again urged the two parties to "show common sense and a responsible attitude as shareholders, for the company's mid- to long-term growth and the benefit of all shareholders."
Meanwhile, MBK and Young Poong said in their own press release Sunday that "since the audit committee has officially received the raised allegations and investigation requests and replied that it will thoroughly review them at its next meeting before stating its position, this review must not remain a mere formality." They added that "as an audit committee formed on the basis of expertise and independence, it must prove its role through an investigation that leaves no question unanswered and responsible follow-up measures."
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