Refer Report
Korea Zinc is joining hands with U.S. private equity firm Bain Capital to launch a counter tender offer worth 3.1 trillion won. The structure is such that Korea Zinc purchases 2.7 trillion won worth of treasury stocks with company debt, and Bain Capital purchases 400 billion won on the market. Korea Zinc Chairman Choi Yoon-beom, whose management rights are being attacked by Youngpoong and private equity fund management company MBK Partners, appeared publicly for the first time since the incident and revealed the plan, saying, “This is the path for all shareholders.”
On the 2nd, Chairman Choi held a press conference at the Grand Hyatt Hotel in Seoul and unveiled a counterattack against the tender offer by Youngpoong and MBK. Korea Zinc plans to invest 2.6635 trillion won from the 4th to the 23rd to purchase 3,209,009 shares, or 15.5% of the total number of issued shares, at 830,000 won per share. Adding to this the 517,582 shares (2.5%) that Bain Capital is trying to secure by investing about 429.6 billion won, the total stake that Korea Zinc is trying to secure through this tender offer is 18%.
Korea Zinc plans to cancel all of its treasury shares acquired through this tender offer. Chairman Choi said of this decision, “It is a sincere and earnest decision to enhance corporate value and protect the interests of all stakeholders, including the company, shareholders, executives and employees of Korea Zinc, and partners.”
The problem is that the 2.6635 trillion won that Korea Zinc plans to invest in purchasing its own shares is largely financed by short-term borrowings. Korea Zinc announced on this day that it had raised a total of 2.7 trillion won in short-term borrowings, including 1 trillion won in short-term corporate bonds and 1.7 trillion won in line loans from financial institutions, which is equivalent to 28% of its equity capital. revealed. An official from Korea Zinc said, “We plan to use our own funds, but also use some external borrowings.”
Since Youngpoong and MBC are raising claims that Korea Zinc’s stock purchase may constitute a breach of trust, the potential for legal disputes to arise in the future has increased. However, Chairman Choi argued that whether the buyback of shares was a breach of trust, “these are claims that have already been raised in court but were not recognized.”
Chairman Choi also directly expressed his position on various other controversies surrounding this incident. Regarding the root cause of the conflict with Youngpoong, he said, “There are people who claim that this sad month was caused by a guy who didn’t even have a lot of stock, but I don’t agree with the idea that the shareholder with 25% of the shares is the owner.” He said, “I am the owner of Korea Zinc.” “The reason I am chairman of the board is not because I have stocks or because I am Mr. Choi, but because the board of directors elected at the general shareholders’ meeting appointed me,” he said.
Regarding the controversy related to the investment in One Asia Partners, he only gave a general answer, saying, “We inform you that the surplus funds were used legally and that all necessary procedures according to internal regulations were completed.” Regarding the shareholder contract with Bain Capital, he said, “There is no contract at all with Korea Zinc, and a contract was signed between that individual and the shareholder, but I cannot tell you in detail due to the confidentiality clause.”
Reporter Nam Ji-hyeon southjh@hani.co.kr
Source: Korean