SEOUL: A South Korean court has denied Young Poong’s request to block Korea Zinc’s share buyback, driving the company’s shares to a new high.
After the court’s decision, Young Poong announced plans to sue, indicating a potential long legal dispute over the control of Korea Zinc.
Young Poong is attempting to gain control of Korea Zinc with private equity fund MBK Partners, prompting Korea Zinc to team up with Bain Capital for a $2.6 billion share buyback offer.
Young Poong claims that Korea Zinc’s executives are misusing their positions by buying back shares at inflated prices, which could increase company debt but strengthen their control.
The court ruled Young Poong failed to provide enough evidence of wrongdoing by Korea Zinc’s leadership.
Korea Zinc’s debt may increase significantly after the buyback, but the court noted this level of debt is not uncommon among listed companies. It also stated calculating the actual value of Korea Zinc shares is complex.
Since MBK’s offer in September, Korea Zinc shares have risen over 50%. The court found no violation of trust since Korea Zinc plans to cancel the repurchased shares.
MBK expressed disappointment with the ruling, fearing it could harm Korea Zinc’s finances and corporate governance in South Korea.
Korea Zinc’s shares closed up 6.4% at a record 877,000 won, nearing the tender offer price of 890,000 won.
MBK will provide updates following the tender offer’s conclusion on Wednesday and plans to contest board control at the upcoming shareholder meeting.
(1 USD = 1,367.77 won)
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