Youngpoong & MBK Sue Korea Zinc Directors for $700M Loss

Youngpoong and MBK Partners have filed a shareholder derivative lawsuit against Korea Zinc's directors, demanding compensation of approximately 700 billion won for damages they allegedly caused to the company through decisions regarding a self-tender offer and a public offering.

According to legal circles on the 14th, Youngpoong recently submitted a shareholder derivative lawsuit to the Seoul Central District Court, arguing that Korea Zinc's directors failed to fulfill their fiduciary duties and caused the company damages amounting to 673.2 billion won. They are demanding that the directors compensate the company for this amount.

The lawsuit alleges that Korea Zinc's board of directors conducted a self-tender offer, acquiring 2,040,030 shares of Korea Zinc at 890,000 won per share, despite the market price being around 560,000 won per share at the time. This resulted in losses equivalent to the difference multiplied by the number of shares purchased.

Of the 13 members of Korea Zinc's board of directors, 10 directors, including Chairman Choi Yoon-bum, are named in the lawsuit. Those excluded from the lawsuit are Jang Hyung-jin, an advisor at Youngpoong (non-executive director) who opposed the self-tender offer and public offering; Kim Woo-joo, Head of Strategic Planning Office 1 at Hyundai Motor Company (non-executive director), who repeatedly missed board meetings; and Seong Yong-rak, an advisor at the law firm Bae, Kim & Lee (outside director).

A shareholder derivative lawsuit is filed by shareholders on behalf of a company to hold directors accountable for damages if the company neglects to pursue such claims. If the plaintiff shareholders win, the awarded compensation is returned to the company, not the shareholders.

Youngpoong and MBK Partners explained that they had initially requested Korea Zinc's audit committee to take legal action about a month ago, but after receiving no response, they proceeded to file the lawsuit. The case also represents the main lawsuit following the rejection of a preliminary injunction (the second injunction) last month to halt the self-tender offer process.

On October 21, the Seoul Central District Court’s Civil Agreement Division 50 (Presiding Judge Kim Sang-hoon) dismissed Youngpoong’s application for a preliminary injunction to stop Korea Zinc’s self-tender offer.

At the time, Youngpoong and MBK stated, "Unlike the expedited decision required for an injunction, the main lawsuit allows ample time to clearly reveal the issues and illegality of the self-tender offer. We will hold the directors accountable until the end through the main lawsuit."


https://www.sankyungtoday.com/news/articleView.html?idxno=49332

Youngpoong & MBK Sue Korea Zinc Directors for $700M Loss