MBK Partners and Youngpoong raised suspicions regarding side agreements related to the equity transaction between Korea Zinc and Hanwha on the 9th. Hanwha rebutted, stating, "It was merely a transaction for the benefit of both parties, and no side agreements exist."
Last month, Hanwha Energy acquired 7.25% of the equity of Hanwha Corporation held by Korea Zinc. Hanwha Energy reclaimed the equity that was transferred to Korea Zinc through a share swap by Hanwha Corporation in November 2022. The Hanwha Group continues to retain its equity in Korea Zinc.
In response, MBK stated, "Shareholders of Korea Zinc, as well as various suspicions about the conditions of side agreements with Hanwha, have been raised in the market," and demanded a thorough explanation of the transaction. MBK pointed out that the selling price of Korea Zinc's equity in Hanwha Corporation (W27,950 per share) is lower than the acquisition cost (W28,850 per share) in 2022, claiming that "Korea Zinc was criticized for selling Hanwha's equity, which should have received a management premium, at a bargain price."
On the same day, the Hanwha Group issued a statement, emphasizing that "an unexpected event occurred regarding the public tender offer for Korea Zinc, leading to the necessity for Korea Zinc to alleviate financial burdens, while Hanwha Energy aimed to strengthen responsible management through mutual agreements between the two companies," asserting that no side agreements were made. The Hanwha Group stated, "By acquiring Hanwha Corporation shares, we resolved the share swap issue raised by academia and civic groups, improving the governance structure of the Hanwha Group and protecting the interests of minority shareholders by alleviating the potential for market sale of Hanwha Corporation equity, which had a positive effect."
In response to MBK questioning the transaction price, the Hanwha Group rebutted, stating, "The transaction price was determined by the market price at the time of the transaction, and since the Hanwha Group has already secured a solid management control over Hanwha Corporation, there is no reason to pay a management premium." The Hanwha Group also announced that it had not decided its stance regarding the exercise of voting rights at next year's extraordinary shareholders' meeting for Korea Zinc.