(LEAD) Young Poong loses shareholder derivative suit against Korea Zinc

(ATTN: UPDATES with Young Poong's response, details in last 5 paras)

SEOUL, Oct. 22 (Yonhap) -- A Seoul court on Thursday ruled against Young Poong Corp. in a shareholder derivative lawsuit seeking 837 billion won (US$631 million) in damages from Korea Zinc Co. Chairman Choi Yun-beom and other company directors.

Young Poong, a major shareholder in Korea Zinc, had filed the suit in November 2024, claiming Korea Zinc's directors had inflicted losses of 837 billion won on the company by making a tender offer involving the purchase of its own shares at 890,000 won apiece, when the actual price was around 560,000 won.

The Seoul Central District Court ruled, however, that Korea Zinc's directors could not be deemed to have violated their managerial duties, citing the steps they took before proceeding with the share purchase.

It also ruled that the action did not violate the Commercial Act or the company's articles of incorporation.

In response, Young Poong and its private equity ally MBK Partners Ltd. said they would immediately appeal the ruling, seeking to restore shareholder value they said had been eroded.

"By focusing narrowly on the broad scope of directors' managerial discretion and superficial procedural compliance, this ruling overlooks the devastating, substantive harm inflicted on Korea Zinc's financial soundness and shareholder value by a share buyback tender offer solely to protect Choi's position," they said in a statement.

During a six-month battle over control of Korea Zinc that ended in March 2025, the world's largest refined zinc smelter fended off a takeover attempt by the Young Poong-MBK alliance.

During the dispute, the two sides launched competing tender offers to acquire additional shares in the company.

Young Poong currently holds a 34 percent stake in Korea Zinc, followed by Choi and related parties with 17 percent, MBK with 9 percent and Hanwha Group with 9 percent.

hague@yna.co.kr
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