Young Poong Precision Corporation announced on the 13th that it has filed a $930 million shareholder representative damages lawsuit against Young Poong's adviser Jang Hyung-jin and five executives. Young Poong Precision believes that there is a possibility of breach of duty as Young Poong is pushing for a hostile merger and acquisition (M&A) of Korea Zinc while granting preferential status to private equity fund MBK Partners.
Previously, on the 10th, Young Poong Precision filed a shareholder representative damages lawsuit against Young Poong's adviser Jang Hyung-jin and the CEO's Park Young-min and Bae Sang-yun, as well as outside directors Park Byung-wook, Park Jeong-ok, and Choi Chang-won, at the Seoul Central District Court. As of the end of September, Young Poong Precision holds 4.39% of Young Poong's equity.
Young Poong Precision claimed that Young Poong caused irreparable damage to the company through various breaches of duty while collaborating with MBK on the hostile M&A of Korea Zinc. Young Poong Precision believes that the damage amount reaches at least $930 million.
In the complaint, Young Poong Precision detailed the issues with the management cooperation contract Young Poong entered into with MBK and the extent of the damage incurred by the company as a result. Young Poong Precision determined that Young Poong effectively abandoned its independent voting rights of Korea Zinc shares, allowing MBK to enjoy the position and rights of Korea Zinc's largest shareholder. Young Poong Precision also concluded that granting MBK the right to exercise call options allowing it to hold more shares than Young Poong itself represents a breach of duty. It stated that Young Poong entered into a contract beneficial only to MBK without any compensation. If MBK exercises the call option, it would be able to hold a larger equity than Young Poong and its related parties, resulting in Young Poong losing its status as Korea Zinc's largest shareholder.
Young Poong Precision noted, 'If MBK exercises the call option, it is expected to purchase Korea Zinc shares held by Young Poong and its related parties at the initial public offering price of 660,000 won per share,' adding, 'MBK will take a huge economic profit compared to the invested funds, while Young Poong shareholders will suffer significant losses.'
Previously in September, Young Poong Precision filed a complaint against adviser Jang Hyung-jin and three outside directors, as well as Kim Kwang-il, vice chairman of MBK, on charges of breach of duty. The case has been assigned to the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office.