Korea Zinc has decided to transfer more than 10% of its shares to the joint venture related to the newly built smelting plant in the U.S., during which the management rights dispute among shareholders has reached another watershed. In this regard, MBK Partners and Yongfeng requested a temporary injunction to suspend the paid capital increase, and the court's judgment may be made as early as December 22, which is expected to have a significant impact on the situation of the subsequent shareholders' meeting.
Korea Zinc Co., Ltd. has decided to establish a joint venture named "Crucible JV" in collaboration with U.S. government agencies to promote the construction of a non-ferrous metal smelting plant in Tennessee, USA. In the equity structure of this JV, the U.S. government holds 40% of the total shares, Korea Zinc holds 10%, and the remaining 50% is borne by private U.S. investors. Korea Zinc is in the process of transferring its 10% stake to the JV through a paid capital increase, although the actual ownership of this portion of shares will belong to the U.S. side, there are opinions that it may be viewed as friendly shares held by Chairman Choi Yun-bum in terms of management rights.
Observations suggest that if this structure becomes a reality, the friendly shares of Chairman Choi's side based on voting rights, along with National Pension, Hanwha, LG Chem, etc., could increase to a maximum of 45.5%. In contrast, MBK & Yongfeng's shareholding ratio is only 43.4%, under this judgment, they believe they may be at a disadvantage in the ownership struggle, and thus have begun to take legal action to prevent paid capital increase.
The Seoul Central District Court, during a hearing on December 19, listened to both parties' claims and requested that Korea Zinc submit materials proving the existence of share requests from the U.S. government. The court plans to make a ruling before the capital injection payment date on December 26, and the industry generally believes that there is a high likelihood of a decision being made on the 22nd. If the court accepts the application for temporary disposition, the establishment of the JV will be delayed, and the relevant shares will only be reflected in the shareholders' meeting after 2026, thus not being able to be counted towards Chairman Choi's friendly shares.
The determination of this temporary disposition has surpassed merely the approval or disapproval of transactions, becoming a key variable in measuring who will control the board of directors at next year's shareholders' meeting in March. Currently, the board of directors of Korea Zinc consists of 11 members from Chairman Choi Yun-hwan's side and 4 from MBK & Yongfeng's side. However, MBK & Yongfeng is attempting to strengthen its influence by increasing the number of directors, and if the friendly share structure changes before the shareholders' meeting, the composition of the board may shrink to a level of 8 to 7.
This trend could directly affect Korea Zinc's future ownership structure and its ability to advance global business. If the court allows for paid capital increase, Chairman Choi is likely to use the new U.S. business as a springboard to ensure operational stability; conversely, MBK & Yongfeng may seek further entry into the board based on shareholder support and exert pressure on management rights. Ultimately, this decision appears to be a significant turning point in the protracted ownership struggle lasting over a year.
