SEOUL: A South Korean court has denied Young Poong’s request to stop Korea Zinc from buying back shares, raising Korea Zinc’s stock to a record high.
After the ruling, Young Poong announced plans to sue, indicating a prolonged legal conflict over the company.
Young Poong is partnering with MBK Partners to gain control, prompting Korea Zinc to team up with Bain Capital for a $2.6 billion buyback offer.
Young Poong claims Korea Zinc’s leaders acted against their fiduciary duties by proposing a buyback at above-market prices, which could increase company debt and strengthen leadership control.
The court found insufficient evidence of these breaches and noted that Korea Zinc’s anticipated debt levels are comparable to those of other companies.
The court also stated that Korea Zinc plans to cancel acquired shares, and there are no legal barriers in South Korea to such buybacks for management control.
MBK expressed disappointment, worrying this could harm Korea Zinc’s finances and corporate governance.
Korea Zinc shares ended 6.4% higher, nearing its buyback offer price.
MBK will update on its plans for a shareholder meeting after the tender offer ends on Wednesday.
Through its tender offer, MBK and Young Poong have secured over a 5% stake in Korea Zinc, preparing for a fight for board control at the upcoming meeting.
($1 = 1,367.7700 won)
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