Korea Zinc's largest shareholder, Korea Investment Holdings (a special purpose corporation of MBK Partners), has filed a shareholder derivative lawsuit (for damages) against Chairman Choi Yun-bum and CEO Park Gi-deok, it noted on the 12th.
This lawsuit is part of the exercise of shareholder rights due to the losses incurred by Korea Zinc when Chairman Choi and CEO Park disposed of 5,436,380 shares (representing 7.25% of total issued shares) of Hanwha at a low price without board resolution in November last year.
Earlier, Korea Investment Holdings demanded that the audit committee of Korea Zinc thoroughly investigate the circumstances surrounding the low-priced disposal of Hanwha shares over a month ago and claim damages from those responsible for the losses, including Chairman Choi.
A company official said, "However, despite this legitimate demand, with more than a month passing without any action from the company, the major shareholder decided to take direct action."
He added, "Chairman Choi and CEO Park unilaterally disposed of Hanwha shares, for which a premium should have been properly received, causing significant financial damage not only to Korea Zinc but also to shareholders. It can be seen that Chairman Choi, knowing the losses well, made a decision against the interests of all shareholders to gain the support of Hanwha's affiliates, the major shareholders of Korea Zinc, as he faced a crisis of losing management control."
The amount claimed is 19.6 billion won. However, reflecting the expected value assuming the shares were not disposed of and were continuously held, the company estimated that the compensation amount would exceed 100 billion won.
On November 23, 2022, Korea Zinc acquired 5,436,380 shares of Hanwha at 28,850 won per share through an off-hours large-scale trading method, under the pretext of a business partnership with Hanwha, through the board resolutions of both companies. Subsequently, Korea Zinc sold the shares to Hanwha Energy on November 6 of last year, one year before the end of the disposal restriction period (3 years). Hanwha Energy is an unlisted company wholly owned by the three brothers of Hanwha Group. The selling price was 2,7950 won per share, which is 3% lower than the purchase price. Therefore, it has been emphasized by MBK Partners that a loss of 5 billion won occurred compared to the acquisition cost. If Korea Zinc had held those shares until now, it is estimated that a valuation profit of 130.7 billion won would have occurred.