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Photo: Young Poong |
[Alpha Biz= Kim Jisun] Young Poong, the largest shareholder of Korea Zinc, said Wednesday it has filed a damages lawsuit against KZ Precision, its chairman Choi Chang-kyu, and CEO Lee Han-sung, alleging that they deliberately created the appearance of an unlawful cross-shareholding structure during the ongoing management control dispute over Korea Zinc.
According to Young Poong, KZ Precision directly participated in forming what it described as an “illegitimate cross-shareholding structure” by transferring shares held by Young Poong on Jan. 23 last year, the date of Korea Zinc’s extraordinary shareholders’ meeting, with the aim of restricting Young Poong’s voting rights.
Young Poong said it intends to hold not only KZ Precision but also Chairman Choi and CEO Lee jointly liable for illegal acts, claiming they led the decision-making process.
According to the company, on Jan. 22, the day before the extraordinary shareholders’ meeting of Korea Zinc, KZ Precision and its CEO Choi Chang-kyu sold their holdings in Young Poong to Sun Metals Corporation (SMC), an Australian affiliate of Korea Zinc.
At the extraordinary shareholders’ meeting held the following day, Korea Zinc said a cross-shareholding structure had been formed—linking Korea Zinc, Sun Metal Holdings (SMH), SMC, Young Poong and back to Korea Zinc. Citing Article 369(3) of the Korean Commercial Act, Korea Zinc restricted the voting rights attached to all of Young Poong’s shares in Korea Zinc, which accounted for about 31 percent of the shares present at the meeting.
Young Poong argued that the decision caused significant losses, stating that although its combined stake with the MBK Partners alliance amounted to 50.72 percent of the shares present at the meeting, it failed to secure a majority on Korea Zinc’s board and therefore lost the opportunity to gain management control.
In the lawsuit, Young Poong said it is initially seeking damages of 10 billion won ($7.5 million) in the form of a partial claim related to the lost opportunity to acquire management control.
The company added that it plans to calculate the full extent of damages—including losses related to the loss of board control, management control premiums, and related costs—and pursue additional claims in the future.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
