Youngpoong slightly ahead by 3% point in share ownership through tender offer
On the 1st, an application for permission to convene an extraordinary general meeting of shareholders was submitted to the Seoul Central District Court.
“We requested to convene a shareholders’ meeting, but Korea Zinc is deliberately delaying it.”
Korea Zinc, which took out the paid-in capital increase card, announced an investigation by the Financial Supervisory Service.
Claimed “there is no illegality” through explanatory materials
Youngpoong applied to the court for permission to convene an extraordinary general meeting of shareholders of Korea Zinc.
As a result of building a united front with MBK Partners and increasing the stake through a tender offer, Youngpoong’s stake is currently 3% points ahead of Korea Zinc Chairman Choi Yun-beom’s side. As Chairman Choi recently announced a paid-in capital increase for Korea Zinc to overcome this situation, it can be interpreted as an intention for Youngpoong to take control of the board of directors by holding a general meeting before that.
On the 1st, the MBK-Youngpoong alliance announced that it had submitted an application for permission to convene an extraordinary general meeting of shareholders of Korea Zinc to the Seoul Central District Court. Previously, a request was made to Korea Zinc’s Board of Directors to convene an extraordinary general meeting of shareholders legally in accordance with the Commercial Act, but the reason given was that the procedures for convening a general meeting were not followed. On October 28, Youngpoong requested the company to convene an extraordinary general meeting of shareholders to decide on the appointment of 14 new directors and the revision of the articles of incorporation to introduce an executive officer system.
The MBK-Youngpoong alliance decided on a large-scale paid-in capital increase of 2.5 trillion won just two days after requesting to convene an extraordinary general meeting of shareholders. If this paid-in capital increase proceeds as scheduled, it will not only cause damage to existing shareholders but also change the company’s shareholder composition and governance structure. He explained, “I applied because there is a need for an extraordinary general meeting of shareholders to be held quickly.”
“The decision by Korea Zinc’s board of directors to increase paid-in capital, which caused losses to existing shareholders and disrupted the market, clearly shows how seriously Korea Zinc’s governance has been damaged due to Chairman Choi Yoon-beom’s tyranny,” he said. “The court “We ask that you look into it and quickly make a decision on permission,” he claimed.
On this day, Korea Zinc issued an explanatory statement (position statement) in response to criticism pointing out the legality of the paid-in capital increase. One day after the Financial Supervisory Service held an emergency press conference the previous day and announced that it would investigate whether Korea Zinc’s paid-in capital increase was illegal. Ham Yong-il, Vice Governor of the Financial Supervisory Service, stated the purpose of this investigation, saying, “If Korea Zinc’s board of directors planned to repay the necessary funds through paid-in capital increase when drawing up a plan for a tender offer of treasury stock, but omitted such information in the tender offer report, it
Regarding this, Korea Zinc first emphasized, “We reviewed the capital increase after the end of the tender offer on the 23rd of last month.” Korea Zinc said, “After the end of the tender offer, we expected the stock price to return to the pre-tender offer level, but as trading volume plummeted from the 22nd of last month, market instability worsened due to a lack of floating volume, and the possibility of delisting was further aggravated due to the decrease in trading volume. “He explained, “As various side effects increased, we urgently pursued a paid-in capital increase.”
In the securities report, it was stated that “Mirae Asset Securities has been conducting due diligence for paid-in capital increase since the 14th of this month,” and in response to the suspicion that paid-in capital increase was already planned before the tender offer, “Mirae Asset Securities signed a corporate bond and commercial paper with a securities company to raise low-interest debt.” “It was incorrectly indicated that we reviewed debt financing plans such as CP),” he explained, adding, “Because our company is a listed corporation with publicly available data, the results of debt financing due diligence, such as issuing corporate bonds, can be used in almost the same way for due diligence on paid-in capital increase.” This means that the securities company incorrectly stated in the report that it used the results of the existing due diligence to increase capital after the fact.
Korea Zinc said, “We apologize for causing unnecessary misunderstanding to investors,” and added, “We will accurately and faithfully explain the actual facts to the authorities and the market and actively resolve the controversy.”
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Interviewer: Good morning and welcome to Time.news! Today, we’re diving into a crucial corporate struggle in South Korea featuring two key players in the metals industry: Youngpoong and Korea Zinc. We’re joined by Dr. Hae-Jin Kim, a corporate governance expert. Dr. Kim, thank you for being here.
Dr. Kim: Thank you for having me! It’s a pleasure to discuss such an important matter.
Interviewer: Let’s jump right in. Youngpoong has managed to secure a 3% lead in share ownership over Korea Zinc through a tender offer. What does this imply for the ongoing power dynamics within the company?
Dr. Kim: This development is quite significant. Youngpoong’s alliance with MBK Partners indicates a strategic maneuver not just for share acquisition but also for influence over the board of directors. If they successfully convene that extraordinary general meeting of shareholders, they could significantly reshape Korea Zinc’s governance.
Interviewer: Speaking of that extraordinary meeting, Youngpoong has taken legal steps to convene it after a perceived delay from Korea Zinc’s side. Why is this meeting deemed so urgent?
Dr. Kim: The urgency stems from Korea Zinc’s recent decision to undergo a paid-in capital increase of 2.5 trillion won. This move could alter the existing shareholder composition and may disadvantage current investors. By pushing for this meeting, Youngpoong aims to mitigate potential losses and assert more control before the situation escalates.
Interviewer: It seems like a high-stakes battle. With Korea Zinc’s announcement about its paid-in capital increase, there’s been some backlash regarding its legality. What are the broader implications if the Financial Supervisory Service’s investigation finds any legal misconduct?
Dr. Kim: If misconduct is confirmed, it could lead to severe repercussions for Korea Zinc, including potential penalties or enforced changes in leadership. This would not only impact Korea Zinc financially but also shake investor confidence, potentially leading to a broader impact on market perceptions of corporate governance in South Korea.
Interviewer: And Korea Zinc’s response has been that their actions are legal and necessary. They’ve mentioned an urgent need for stabilizing the company. How do you assess this justification?
Dr. Kim: Their stance suggests a defensive strategy. While they argue that the capital increase was a response to market instability and trading volume issues, the timing raises questions. It could be seen as an attempt to fortify their position amidst growing challenges from Youngpoong. However, if the board’s decisions are perceived to disregard shareholder interests, it could exacerbate governance issues and lead to greater scrutiny.
Interviewer: Based on what you’re observing, do you think this situation could serve as a wake-up call for other companies regarding governance practices?
Dr. Kim: Absolutely. This scenario highlights the importance of transparency and accountability in corporate decision-making. As stakeholders become more vigilant, companies may be prompted to evaluate their governance structures to prevent conflicts and ensure that shareholder interests are prioritized.
Interviewer: Dr. Kim, your insights are illuminating! Before we conclude, what should shareholders and potential investors keep an eye on in the coming weeks regarding Youngpoong and Korea Zinc?
Dr. Kim: Shareholders should closely monitor the legal developments surrounding the extraordinary general meeting. Additionally, any updates from the Financial Supervisory Service’s investigation will be crucial. The outcomes of these events could not only influence the future of these companies but also set precedents for corporate governance in the industry.
Interviewer: Thank you, Dr. Kim, for your expert analysis. We look forward to seeing how this situation unfolds.
Dr. Kim: Thank you for having me, and I’m eager to see how this corporate saga progresses.
Interviewer: That’s it for now! Stay tuned with Time.news for more updates on significant business developments.