MBK: "Korea Zinc Debt Soared from 800 Billion to 7.5 Trillion Won in Two Years... Choi Yunbum Must Step Down"

MBK Partners Issues Statement on Second Anniversary of Public Tender for Korea Zinc

"Private Gains for the Choi Family, Financial Losses and Risks for the Company"

MBK Partners, the largest private equity fund (PEF) manager in Northeast Asia, has publicly stated its official position for the first time two years after engaging in a public takeover battle for management control against Choi Yunbum, Chairman of Korea Zinc, and his family. MBK Partners argued that while the Choi family reaped private gains, they shifted massive financial losses and legal risks onto the company and its shareholders. Therefore, MBK asserts that Chairman Choi's resignation is the starting point for normalizing Korea Zinc's governance structure.

On September 28, MBK Partners issued this statement. Previously, on September 13, 2024, MBK Partners joined forces with Korea Zinc's largest shareholder, Young Poong, to launch a public tender offer. Since then, the firm has raised suspicions over several issues, such as the injection of several hundred billion won into unrelated entertainment ventures, and an approximately 580 billion won investment into Igneo Holdings, a US electronic waste company with limited track record. MBK Partners claimed that, after two years of the management dispute, ongoing investigations by authorities and law enforcement are uncovering the facts behind these allegations.

MBK Partners stated, "A total of 69 billion won was injected from the One Asia Partners Fund—capitalized with Korea Zinc's funds—into unlisted entertainment companies such as Arc Media, HiHat, and Slingshot, in which the Choi family personally invested first." The company criticized, "While the Choi family secured opportunities to recoup their investment and increase their equity value, HiHat and Slingshot, both funded with Korea Zinc resources, have fallen into complete capital erosion, and the Arc Media-related investment also faces the risk of principal loss."

Furthermore, MBK Partners pointed out, "Since the Securities and Futures Commission decided on severe disciplinary action against omissions in related-party transaction disclosures and violations of accounting standards, this is not a mere error in accounting practice. It constitutes a breach-of-trust transaction, where family members engage in self-serving deals at the company's expense and push the resulting losses onto Korea Zinc and its general shareholders."

MBK Partners also criticized Chairman Choi's attempts to defend his managerial control, arguing that it inflicted financial and legal losses on the company. To finance a 1.8 trillion won buyback of treasury shares through a public tender, Korea Zinc borrowed more than 2 trillion won from external sources. As a result, Korea Zinc's separate-basis borrowings surged from 387.6 billion won at the end of 2023 to 2.9966 trillion won at the end of 2024. Annual interest expenses jumped more than fivefold, from 25.6 billion won in 2023 to 153.1 billion won in 2025. MBK emphasized that, amid ongoing management disputes with Young Poong and MBK, the company proposed but withdrew a 2.5 trillion won general public rights offering, causing expenses to snowball.

As a result, MBK Partners stated, Korea Zinc transformed from a company with 800 billion won in consolidated external debt and 2 trillion won in cash and equivalents at the end of 2023 to an overleveraged company with approximately 7.5 trillion won in external debt and only 1.6 trillion won in cash and equivalents at the end of the first half of this year. MBK Partners emphasized, "Korea Zinc is not the private property of any individual. It is a key national industry in nonferrous metals and plays a vital role in the global supply chain for strategic minerals. As the company's resources and capabilities are being consumed to address the legal risks and liability evasions surrounding Choi Yunbum, it is essential that the Choi family step away from management to begin normalizing Korea Zinc's governance."

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