Korea Zinc Wins Twice in a Day...Victory in 837 Billion Won Treasury Stock Lawsuit Followed by Hanwha Stake Lawsuit

Korea Zinc won both major lawsuits filed in a single day by Youngpoong and MBK Partners coalition, its rival in the management rights dispute. The lawsuits concerned the legality of treasury stock public tender offer and the justification of the sale of Hanwha Inc. stake, confirming the management decisions of Korea Zinc's board of directors in a management rights dispute that lasted over a year.

On the 22nd, the Seoul Central District Court's Civil Division 30 (presiding judge Kim Seok-beom) dismissed all shareholder derivative lawsuits filed by Youngpoong against 10 directors including Korea Zinc Chairman Choi Yun-beom. Youngpoong had been demanding compensation from the directors, claiming that Korea Zinc caused damage to the company through a treasury stock public tender offer in which it purchased 2,040,030 shares at 890,000 won per share during the 2024 management rights dispute. The claim amount, which was 673.2 billion won at the time of filing in November 2024, increased to approximately 836.9 billion won by April of this year. The court ruled that the decision to purchase treasury stock did not constitute a breach of the duty of care or fiduciary duty by the directors.

That same afternoon, Civil Division 21 dismissed a damage suit filed by Korean Enterprise Investment Holdings, a special purpose company of MBK side, against two people including Korea Zinc CEO Park Ki-deok. The claim alleged that Korea Zinc caused damage to the company by selling a 7.25% stake in Hanwha Inc. to Hanwha Energy for approximately 152 billion won, with claims of 275.9 billion won in the primary claim and 30.4 billion won in the alternative claim.

Korea Zinc stated immediately after the verdict, "The court respected the board's management decision," and confirmed that "it was confirmed that this was a predatory hostile takeover attempt by predatory capital." Meanwhile, MBK and Youngpoong announced their immediate appeal, saying they "overlooked the substantial harm posed by the chairman's treasury stock tender offer for seat preservation." Both rulings are first instance decisions, and the dispute will continue to the appellate court.

With this ruling, Korea Zinc can take a breath from the legal justification controversy surrounding its management rights defense. However, with the equity competition with the Youngpoong and MBK coalition and additional litigation remaining, the final outcome of the dispute is still ongoing.