Jericho Partners Borrows 6 Billion Won From Chairman Choi Yoonbum's Side to Counter Young Poong Tender Offer

P121 Partners Lends 6 Billion Won to Chairman Choi
Family Affiliate Yumi Development Joins 250 Million Won Capital Increase
Concerns Raised Over Potential Cash Drain Due to Pledged Shares

It has come to light that Jericho Partners, the special purpose company (SPC) established by Choi Yoonbum, Chairman of Korea Zinc, for the counter-tender offer against Young Poong Precision, has borrowed funds from an affiliate and executed a capital increase through a third-party allocation. Since the company raised funds several times last year as well, there is speculation that it may be under financial pressure due to financing costs incurred during previous tender offers.

According to the Financial Supervisory Service’s electronic disclosure system on September 18, P121 Partners announced on September 14 that it had decided to lend 6 billion won to Jericho Partners, its affiliate, for operating funds. The interest rate on the loan is 4.6% per year, and the lending contract was signed on September 7. P121 Partners is a related-party corporation established by Chairman Choi personally.

On the same day, Jericho Partners also disclosed that it had resolved to raise operating funds by issuing 2,500 new common shares through a third-party capital increase. The new shares will be issued at 100,000 won per share for a total of 250 million won in funding. The allocation target is Yumi Development, an affiliate and shareholder of Korea Zinc.

Jericho Partners is the entity which conducted the counter-tender offer against the KZ Precision (formerly Young Poong Precision) tender offer by the Young Poong·MBK Partners consortium. The company has consecutively secured funds from the special-purpose companies owned personally by Chairman Choi and his family, as well as related-party affiliates. This has led to speculation that, following the counter-tender offer, the company may be facing cashflow challenges stemming from financial expenses and operating fund depletion. At the end of last year as well, Jericho Partners executed a capital increase due to loan repayment burdens, and approximately 54 billion won from Chairman Choi and the Choi family flowed into the company.

There is also a view that Chairman Choi’s side, having mobilized funds by pledging most of their Korea Zinc shares as collateral, is struggling to secure additional cash while continuing to provide financial support to Jericho Partners. According to a major shareholder report on Korea Zinc stock disclosed in August, Chairman Choi’s family and related parties (a total of 12 entities) provided a combined 1,438,843 shares of Korea Zinc as collateral for stock-backed loans to Meritz Securities and others. This accounted for 59.3% of their total shareholding (2,426,214 shares).

An industry insider stated, “A significant portion of Chairman Choi’s key asset—his stake in Korea Zinc—is already tied up in stock-backed loans,” adding, “Given the cash flows among affiliated companies such as Jericho Partners and P121 Partners, suspicions are being raised that their overall liquidity and ability to raise funds are rapidly declining.”

This content was produced with the assistance of AI translation services.