With Korea Zinc set to hold an extraordinary shareholders meeting on the 9th to appoint four independent directors and one audit committee member, the MBK–Young Poong consortium, the largest shareholder, and Chairman Choi Yoon-beom of Korea Zinc, who holds management control as the second-largest shareholder, are waging a public battle outside the meeting.
The two sides are clashing over the one audit committee seat, which is expected to come down to a tight vote, while also fiercely disputing fund investments and accounting treatment.
Korea Zinc said in a statement on the 6th, "As not only the world's two major proxy advisors but also major domestic and overseas institutions have expressed opposition by '8 to 1' to the audit committee candidate recommended by the MBK–Young Poong side, leaving them cornered, they are scrambling day after day to sway public opinion based on distortions of fact."
Of the four independent directors to be appointed at this extraordinary meeting, two candidates recommended by Korea Zinc and two by MBK–Young Poong are likely to be elected. The issue is the one audit committee member.
Korea Zinc put forward Baek In-gyu, a Dankook University professor who handled accounting, audit, and financial advisory work at Deloitte Touche Tohmatsu Limited (DTTL) Anjin. The MBK–Young Poong candidate is Park Yu-kyung, Asia-Pacific head of responsible investment and governance at APG.
So far, the Korea Zinc-side audit committee candidate has the upper hand. Of nine proxy advisors, eight—except for Korea ESG Standards Institute—are said to support Baek In-gyu. However, MBK–Young Poong argues, "Park was recommended through an independent nominating committee." They also sent an open letter asking affiliates of Hanwha Group and LG Chem, which hold around 10% of Korea Zinc's equity, to support Park.
Another point of contention is Korea Zinc's capital commitments to multiple private equity funds managed by One Asia Partners, a private equity manager. MBK–Young Poong claims Chairman Choi faces allegations of unlawful support and breach of duty for privately using company funds.
In response, Korea Zinc said, "Whether a fund invests is determined independently by the manager after an investment committee review and due diligence, and Korea Zinc has repeatedly said it participated as a limited partner (LP) in funds managed by One Asia Partners," adding, "MBK–Young Poong has failed to present objective evidence to support its claims, instead repeating for two years distorted and one-sided assertions through speculative judgments such as 'questions and suspicions' and a string of sensational, selectively pieced-together terms."
Korea Zinc has also gone on the offensive against Young Poong. Korea Zinc argues that accounting treatment issues within Young Poong should be examined first.
Korea Zinc said, "According to the minutes disclosed by the Securities and Futures Commission (SFC), during deliberations on Young Poong's environmental remediation provision, when asked about the SFC's finding of gross negligence or intent, the Financial Supervisory Service (FSS) replied, 'For the three findings of intent, there were remediation orders from environmental authorities, and the situation was one in which all could be presumed, and the company was aware—there is a clear difference,' according to continued reports," adding, "The fact that there are as many as three findings of intent is evidence that governance problems are serious, according to accounting experts. There is not even an explanation from Young Poong itself on whether its audit committee is functioning properly or whether it has initiated an audit of the matter."
Korea Zinc said, "The MBK–Young Poong consortium is once again repeating one-sided claims fronted by distortions of fact and provocative expressions, sowing confusion among the market and shareholders," adding, "It is our judgment that this conduct is intended to influence the market and shareholders through media play and negative framing for a hostile merger and acquisition (M&A), and we plan to hold them legally accountable to the end."