Signs indicate that the management rights dispute is coming to a close, causing Korea Zinc's stock price to slip. Since September of last year, Korea Zinc has been involved in a competition for equity in collaboration with the private equity firm MBK Partners to oust the current management led by major shareholder Young Poong. On the 27th, as a ruling was issued denying voting rights for shares held by Young Poong, a favorable situation for Korea Zinc was formed, and the stock price seems to be stabilizing.
On this day, Korea Zinc closed at 839,000 won, down 1.18% from the previous day. The price had surged to 871,000 won but fell starting around 3 p.m. when the court ruling was announced.
The Seoul Central District Court's Civil Division 50, led by Presiding Judge Kim Sang-hoon, dismissed the provisional injunction filed by Young Poong and MBK Partners, requesting that voting rights be granted in the shareholders' meeting against Korea Zinc.
Earlier in January, Korea Zinc utilized the mutual share system to prevent Young Poong from exercising its voting rights. According to corporate law, if a company holds more than 10% of equity in another, it cannot exercise voting rights. Consequently, Choi Yoon-beom, the chairman of Korea Zinc, transferred 10.3% of the Young Poong equity held by his supporters to the Australian subsidiary, Sun Metal Corporation Holdings (SMH), to create a circular relationship among Young Poong, Korea Zinc, and SMH.
Young Poong and MBK Partners immediately protested and filed a provisional injunction, but the court dismissed it on this day. As a result, at the regular shareholders' meeting to be held on the 28th, Young Poong and MBK Partners will exercise voting rights with a 15.57% equity stake. As of the end of last year, Chairman Choi’s faction held a 34.35% equity stake.
As the current management and Young Poong·MBK Partners engaged in successive hostile tender offers over Korea Zinc, the stock price once soared to 2.4 million won. The reason for this was that both sides maintained equity stakes in the mid-30s, which kept the momentum from tilting towards one side. However, with the ruling on this day, the current management gained the upper hand over Young Poong and MBK Partners. Given that the stock price had risen not due to the company's fundamentals but rather due to the management rights dispute, it is expected that the price will return to its original level after the driving factors are exhausted.