The alliance of Young Poong and MBK Partners, which is in conflict with Chairman Choi Yoon-bum over the management rights of Korea Zinc, files a shareholder representative lawsuit against Chairman Choi and Park Ki-deok, CEO of Korea Zinc. This action follows the sale of all shares in Hanwha Corporation that Korea Zinc had held last year.
Young Poong announced in a news release on 5th that "regarding Korea Zinc's sale of 7.25% of its equity in Hanwha Corporation to Hanwha Energy at a low price, we have decided to file a shareholder representative lawsuit against CEO Park Ki-deok, who made that decision, and Chairman Choi, who is the substantive decision-maker, and we have started the procedures for this."
Earlier, in November last year, Korea Zinc sold all its shares in Hanwha Corporation through an after-hours block trade to Hanwha Energy. The selling price was 27,950 won per share. This is 3% lower than the price at which Korea Zinc had purchased the shares from Hanwha Corporation through an exchange method in 2022.
A Young Poong-MBK official noted, "Just four months before this transaction, Hanwha Energy conducted a public purchase of Hanwha Corporation shares at 30,000 won per share," adding, "If Korea Zinc had responded to this public purchase and disposed of its shares in Hanwha Corporation, it would have made a profit of about 1.1 billion won instead of a loss of 490 million won compared to the purchase price."
They claimed, "It caused significant financial damage to Korea Zinc and its shareholders by disposing of stocks that should have rightfully fetched a premium at a bargain price," asserting that "Chairman Choi, aware of such losses, committed acts of breach of trust against the company and shareholders to secure support from subsidiaries of Hanwha, a major shareholder of Korea Zinc, while being faced with the threat of losing management rights at that time."
The Young Poong-MBK side argued that the actual opportunity loss exceeds 490 million won. A company official emphasized, "For Hanwha Energy, it secured important shares for group succession at a much lower price than expected, but for Korea Zinc, it ended up disposing of assets that could have been sold at a higher price at a loss."
Young Poong-MBK argued that although the scale of the sale of Hanwha Corporation shares exceeded 100 billion won, the board resolution was omitted, stating, "It’s inconsistent to claim that a resolution was necessary when acquiring shares but not when disposing of them."