Young Poong said on the 4th that it filed a damages suit against KZ Precision and its management, including Chair Choi Chang-gyu and CEO Lee Han-sung.
It said the reason was their involvement in creating the appearance of a cross-shareholding relationship by transferring Young Poong's shares to restrict Young Poong's voting rights at Korea Zinc's extraordinary shareholders meeting on Jan. 23 last year.
It said KZ Precision, while a minority shareholder of Young Poong, participated as a related party on the side of Korea Zinc Chair Choi Yoon-beom to form an unlawful cross-shareholding structure, thereby blocking Young Poong's legitimate exercise of shareholder rights and the normalization of Korea Zinc's governance structure.
According to Young Poong, the related parties of Korea Zinc Chair Choi Yoon-beom at KZ Precision, including Chair Choi Chang-gyu, sold their Young Poong shares on Jan. 22 to SMC (Sun Metal Corporation), Korea Zinc's Australian affiliate.
Through this, they formed a cross-shareholding structure linking Korea Zinc–SMC–Young Poong–Korea Zinc, and, based on Article 369, Paragraph 3 of the Commercial Act, restricted the exercise of voting rights for all Korea Zinc shares held by Young Poong, equivalent to about 31% of the shares present, according to Young Poong.
Young Poong argues that due to this illegal act, even though its combined equity with the MBK Partners alliance reached 50.72% of the shares present, it failed to secure a majority of Korea Zinc's board and suffered a loss of the opportunity to obtain management control.
In this lawsuit, Young Poong first claimed only 10 billion won in the form of a partial claim for damages arising from the lost opportunity to gain management control. It plans to specifically calculate the total amount of damages, including the loss of a control premium due to the loss of board dominance and related expense, and to further contest it.
Young Poong said, "We filed a damages lawsuit against KZ Precision to restore Young Poong's shareholder value damaged by the unlawful restriction of voting rights and to protect shareholders' valuable rights," adding, "As the largest shareholder of Korea Zinc, we will continue to play a responsible role in normalizing the company's governance structure and enhancing shareholder value."