2024-09-18
| Official Statement by Ki-Deok Park, President of Korea Zinc
Korea Zinc opposes the predatory M&A by the corporate raider MBK, and vows to safeguard the company from speculative capital |
Hello, this is Ki-Deok Park, President of Korea Zinc.
Korea Zinc officially opposes the hostile tender offer being unilaterally pursued by our shareholder, Young Poong Corporation, in collaboration with MBK Partners, which is known for its corporate raiding practices. We regard this tender offer as a hostile and predatory M&A attempt by corporate raiders, aimed at taking over our company, which holds the world’s number one market share in the non-ferrous metal sector, and is a key national industry. Thus, we clearly state our opposition to this tender offer.
Korea Zinc’s management, the driving force behind the company’s top position in the non-ferrous metals market, is well-equipped with business skills and future vision
Korea Zinc, despite South Korea’s limited natural resources, has risen to the top in the global market for non-ferrous metals (including zinc, lead, silver, and indium), driven by the unified efforts of our employees and capitalizing on domestic resources and technology. We have played a pivotal role in raising South Korea’s global profile.
Moreover, beginning with founder Choi Ki-ho and continuing through honorary chairmen Choi Chang-gul, Choi Chang-yeong and Choi Chang-geun, to the current chairman Yun B. Choi, our past and present management teams and employees have combined their industry expertise, management know-how and pioneering technology over decades to achieve global competitiveness and a leadership position in non-ferrous metals.
Korea Zinc is not stopping here. From the current management down to every employee, Korea Zinc is committed to raising capital domestically, developing technologies independently, and enhancing its competitiveness in the rechargeable battery sector, one of the Korean government’s future strategic industries. This is to ensure Korean corporations’ independence from Chinese capital and companies.
Young Poong’s repeated violations of the Environmental Act and Serious Accidents Punishment Act as well as massive losses testify to the lack of managerial competency
In contrast, Korea Zinc’s shareholder Young Poong, which is proceeding with the tender offer in collusion with MBK, a speculative private equity fund and predatory corporate raider, has caused significant environmental damage to the local communities and the Nakdong River system while operating its Seokpo smelter.
Moreover, Young Poong’s co-CEOs have been recently arrested and detained due to the frequency and severity of major industrial accidents and are facing additional criminal charges for environmental violations in the wake of a cadmium dumping scandal. Amid a public outcry, Young Poong finds itself entangled in a profound crisis to the point of a breaking point. Despite numerous safety accidents, workplace fatalities and environmental pollution problems, Young Poong has failed to address these issues for years. It is one of the few companies that come under the scrutiny of the national parliamentary audit committee almost every year.
Despite the continued social issues surrounding Seokpo smelter, such as layoffs, Young Poong has neglected its duties to normalize the smelter’s management and address its safety and environmental issues. Instead, Young Poong appears to be solely engrossed in securing management rights and shares of Korea Zinc in collusion with a predatory private equity fund. These failures in fulfilling its duties have been a misfortune not only for our employees but also for Young Poong’s.
MBK Partners, a predatory speculative capital, raises concerns over its impact on Korea’s national backbone industry and its role in technology leakage
MBK Partners has a checkered history of taking over competitive homegrown companies in South Korea, only to sell off key assets or extract excessive dividends to recoup investments. Its predatory practices are not limited to asset stripping but often involve unfair dismissals, negatively affecting employees at target companies and local communities and undermining the enterprise value of their targets.
In addition, MBK Partners has long been criticized for its corporate raiding and speculative activities by politicians and the media. The media expect that MBK Partners’ predatory practices against Korean companies will come to focus during this year’s parliamentary audit
If a private equity fund of this nature were to gain control of our company, it would likely harm our employees, local communities, and stakeholders. Furthermore, as a private equity firm ultimately focused on maximizing investment returns, it is highly likely MBK will resort to unilateral management practices that contradict the interests of shareholders and employees.
Through its strategic initiative titled Troika Drive, Korea Zinc has been working to secure new growth drivers such as Secondary Battery Materials, Renewable Energy and Hydrogen, and Resource Recycling, leveraging its competitiveness in the traditional refining business. If Korea Zinc’s management rights are taken away through the hostile takeover attempt, the key business strategies will be at high risk of being derailed, taking a heavy toll on shareholders’ value.
Above all, it should be noted that MBK Partners is known to hold call options on the shares owned by Young Poong and its affiliated persons. It supports the high likelihood that once the hostile takeover comes through, the acquirer in collusion with the predatory PE will resell the management rights of Korea Zinc to overseas capital. If such is the case, there are concerns raised over the potential loss of key technologies and capabilities related to the national backbone industries and secondary battery materials to overseas entities.
A hostile takeover by Young Poong and MBK Partners to significantly undermine the enterprise value and shareholders’ value
Currently, Young Poong’s Jang Hyung-jin is seeking to acquire management rights to Korea Zinc in collusion with a private equity fund known for its corporate raiding practices. It is a clear a hostile takeover attempt by Jang, the failed former CEO of the crisis-hit Young Poong and Seokpo smelter, that runs contrary to the will of Korea Zinc’s management, which has demonstrated its business acumen by solidifying Korea Zinc’s market leading position over the past 50 years. Korea Zinc believes that the tender offer, if successful, will undermine Korea Zinc’s enterprise value in the medium and long term, thereby hurting the interest of its stakeholders, not to mention minority shareholders.
Given the unique nature of the non-ferrous metal smelting industry, which is both a national key industry and a capital-intensive sector, as well as Korea Zinc’s world-leading technology and expertise, we believe that the long-accumulated industrial expertise and management know-how of the current leadership are our core competitive strengths. We also believe that the current management’s long-term vision and global network are essential for the company’s sustainable growth.”
The comparison between Young Poong, where Jang Hyung-jin has held a position of CEO for a long time, and Korea Zinc under the current management reveals gaping differences on every aspect—global competitiveness, earnings performance, shareholders return, corporate social responsibility and ESG, to name just a few. Moreover, corporate raiders such as MBK Partners, which is Young Poong’s ally, are interested only in short-term profits, which is incompatible with Korea Zinc’s commitment to fostering rechargeable battery materials as Korea’s strategic industry and growth engine and enhancing its enterprise value in the medium and long term.
To reiterate, if the public buyers gain control of Korea Zinc, it is certain that our corporate value and global competitiveness will deteriorate in no time.
Korea Zinc’s management is dedicated to increasing the enterprise value and shareholders value by protecting the company from speculative capital
Korea Zinc’s current management, with its distinctive business competitiveness and solid earnings performance, has implemented interim dividends and implemented proactive shareholder return policies, such as share buybacks, in addition to regular dividends. These efforts to enhance shareholder value have been widely supported by our shareholders. As a result, Korea Zinc’s current management has been highly recognized by the market as well as its shareholders. Therefore, it is impossible to expect that the financial investors who have made a tender offer, or Young Poong’s failed CEOs will be able to adequately replace to role of Korea Zinc’s current management.
Under the leadership of its current management, Korea Zinc has been and will continue to be committed to ensuring sustainable growth, increasing shareholders’ value through various shareholder return policies and supporting its own employees and local communities.
Korea Zinc is also fully prepared to address the current situation. We vow to safeguard the company from predatory speculative capital and the socially problematic corporate forces that have colluded against us under the banner of greed. To this end, Korea Zinc asks for continued support and trust from all of our shareholders and stakeholders.
President of Korea Zinc
Ki-Deok Park
