Korea Zinc's overseas subsidiary, Sun Metal Corporation (SMC), emphasized that the acquisition of Young Poong's stocks is a "lawful and legitimate action," stating it is a "reasonable financial and business judgment following the resolution as a corporation."
On the 31st, SMC stated in a press release that "by preventing a hostile merger and acquisition (M&A) against the parent company, we are able to maintain stable business operations in Australia and sustainable future growth momentum."
SMC explained that the hostile M&A by MBK and Young Poong could reduce SMC's business scale and that if there are disruptions in the renewable energy supply from Korea Zinc, which is essential for SMC, competitiveness would be compromised.
SMC emphasized that using mutual stocks for management rights defense is a lawful and legitimate means recognized by Supreme Court precedents. It also refuted the claim that being a limited liability company and foreign entity exempts it from mutual stock restrictions.
SMC noted that "the regulations for foreign companies in Chapter 6 of the Commercial Act are solely for regulating and supervising the activities of foreign companies conducting business domestically" and stated, "It has no relevance to whether a foreign company is included in the mutual stock regulations regarding the exercise of voting rights for Korea Zinc, a domestic corporation."
It continued, "SMC is a type of corporation fundamentally consisting of a capital, shares, and shareholder liability under Australian company law, and is essentially a private company with no more than 50 shareholders," adding that it holds a total of 551,819,931 common stocks along with the rights and details of issuing bonds and notes.
From an investment perspective, SMC maintains that it was a reasonable judgment. It noted, "We purchased Young Poong's stocks at a price approximately 30% lower than the closing price from the Choi family," and added, "Young Poong is significantly undervalued with a price-to-book ratio (PBR) of around 0.1 to 0.2, and there is a high possibility its stock price will rise due to recent demands from minority shareholders and activist funds for improved governance and shareholder-friendly policies."