Korea Zinc to decide on disputed $1.8 billion share plan as pressure rises

Bloomberg News | November 12, 2024 | 

Ground-breaking ceremony for an all-in-one nickel refinery in 2023. Credit: Korea Zinc

Korea Zinc Co.’s board will meet on Wednesday to decide whether or not to proceed with a $1.8 billion share sale plan which prompted a selloff in the stock and triggered an investigation by the country’s financial watchdog.


The world’s largest zinc smelter has been caught up for months in a fight between its largest shareholders over strategy and direction. The long-simmering feud burst into public view in September, after private equity firm MBK Partners Ltd teamed-up with Korea Zinc’s biggest shareholder Young Poong Corp. and launched an unsolicited bid.

A rival group led by Chairman Choi Yun-beom and backed by private equity firm Bain Capital responded with a share buyback. Once that completed, however, Choi immediately announced a plan to to sell new shares at an indicative price of about 670,000 won apiece — close to 57% below the previous day’s record close.

The stock tumbled on the news and the Financial Supervisory Service ordered Korea Zinc to revise its filing, saying the initial plan lacked details, including an articulation of its decision-making process and information around the due diligence on the arranger.

In spite of the sharp drop late last month, Korea Zinc shares are still trading at more than double what they were worth in early September

The company will hold a media conference Wednesday starting at 3:00 p.m. local time, which will be attended by Choi among others, the company said.

Should the company decide to shelve the share issue plan, it would be a blow to Choi’s efforts to shore up support among shareholders and employees, who stood to be allocated a fifth of the new stock. It would also delay his proposed move to pay down debt. By pressing ahead, however, the metals heavyweight would likely feed concerns around corporate governance and transparency.

In spite of the sharp drop late last month, Korea Zinc shares are still trading at more than double what they were worth in early September, before the MBKP and Young Poong joint takeover offer. The company’s market capitalization stands at close to $17 billion, placing it among the country’s most valuable companies. The stock rose 5.4% in early Wednesday trade.

A major producer of metals at the heart of the energy transition, the company is vital to global efforts to diversify the supply chain away from China.

(By Heejin Kim)