MBK, Young Poong Raise Questions Over Korea Zinc Chairman’s Arc Media Investment

The logo of MBK Partners. Young Poong and MBK Partners have raised questions over the timing of Korea Zinc Chairman Choi Yun-beom’s personal investment in Arc Media, an unlisted entertainment production company, and subsequent investments involving Korea Zinc-related funds in 2020. According to documents cited by Young Poong and MBK Partners, Korea Zinc invested approximately 23.66 billion won, or approximately $17.73 million, in Korea Growth Fund No. 1, a private equity fund managed by OneAsia Partners, on May 12, 2020. The investment represented 94.64% of the fund’s 25 billion won capital call for Arc Media. On May 29, Choi personally acquired 1.7 billion won worth of Arc Media’s first series of convertible bonds. A week later, on June 5, seven individuals described by Young Poong and MBK Partners as Choi’s associates participated in a private placement of Arc Media shares at 5,000 won per share. OneAsia Partners CEO Ji Chang-bae was also appointed an inside director of Arc Media that day. The fund subsequently invested in Arc Media’s second series of convertible bonds on July 10, approximately 59 days after Korea Zinc’s initial capital contribution. Young Poong and MBK Partners questioned whether Choi and the other investors had prior knowledge of the planned corporate investment, citing the sequence of transactions. They also noted that one of the seven individuals who acquired shares in Arc Media was appointed an outside director and audit committee member of Korea Zinc the following year. The shareholder group has raised concerns over potential conflicts of interest and the appropriateness of the investment process. However, the timing of the transactions alone does not establish wrongdoing, and the allegations would require further examination of the relevant investment decisions and circumstances. Young Poong and MBK Partners also cited domestic media reports indicating that tax and judicial authorities were examining matters related to investments involving Choi and OneAsia Partners. The scope and findings of those reported inquiries have not been independently verified.