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With the Supreme Court finalizing its order for the submission of documents related to the "Korea Zinc Management Cooperation Agreement" concluded between Youngpoong advisor Jang Hyeong-jin and MBK Partners (hereinafter referred to as MBK), attention is turning to whether the share sale conditions, which had long been shrouded in mystery, will be revealed during the litigation process. As a result, the Joo Ju (CEO) lawsuit filed by KZ Precision, a shareholder of Youngpoong, is also expected to gain momentum.
According to legal sources on the 14th, the Supreme Court dismissed Jang's side's petition for retrial without a hearing in August, thereby upholding the first- and second-instance rulings that ordered the submission of the contract to the court. Although no specific submission date was specified, legal experts predict that it will be difficult for Jang's side, as the holder of the document, to avoid submitting it now that the Supreme Court has issued its final decision.
The most closely watched aspect is the "call option exercise price" and detailed conditions under which MBK can purchase a portion of Youngpoong's and Jang's shares in Korea Zinc.
According to electronic disclosures by the Financial Supervisory Service, the timing for exercising the call option is the earlier of "the day on which directors recommended by Youngpoong, Jang, and MBK hold a majority of the Korea Zinc board of directors" and "the day that marks two years from the completion of the public tender offer." Since Youngpoong and MBK have not yet secured a majority of the board, the call option becomes exercisable from mid-October this year, which is the second anniversary of the completion of the public tender offer, according to the disclosure criteria.
For some time, speculation has been rampant due to conflicting reports regarding the call option exercise price: one view held that it was fixed at the initial public tender offer price of 660,000 won, while another reported that the call option exercise price would decrease if the public tender offer price rose. If the exercise price is confirmed to be significantly lower than Korea Zinc's current share price, which is fluctuating around 1 million won, or the final public tender offer price, controversy may intensify over the claim that Youngpoong entered into the contract despite being aware of the potential loss to its side.
KZ Precision, a shareholder of Youngpoong, has raised suspicions of breach of fiduciary duty, arguing that if the Youngpoong board of directors contracted to transfer Korea Zinc shares—the company's core asset—to MBK under excessively favorable conditions, it would constitute an act causing damage to the company and its shareholders.
Some in legal circles point out that one must examine not only the sale price itself but also what specific conditions Youngpoong secured as consideration for disposing of its shares. This is because if the structure results in no corresponding quid pro quo or economic benefit returning to Youngpoong despite selling shares at a price below market value, whether the board members violated their duties of care and loyalty could become a central issue.
Meanwhile, MBK denied the suspicions in October 2024. MBK explained, "Some reports stating that the call option exercise price decreases as Korea Zinc's public tender offer price rises are contrary to fact," adding, "The call option exercise price is fixed at an agreed-upon price reflecting the control premium for Korea Zinc."
If the actual management cooperation agreement is submitted in accordance with the court's order and its detailed contents are disclosed, the legal dispute over the liability of Youngpoong's board members regarding the appropriateness of the sale conditions and the direction of the fight for control of Korea Zinc appear set to enter a new phase.
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*This content was translated by AI.View Original
