Young Poong and MBK: "Korea Zinc Mobilized Nearly KRW 10 Billion to Help Chairman Choi Yun-beom's Associates Buy Back a Listed Company"

"A Carbon Copy of the Suspected Indirect Financial Support for Chungho Comnet"

Young Poong and MBK Partners alleged that Korea Zinc used company funds in the process of reacquiring a listed company by associates of Chairman Choi Yun-beom.

Young Poong and MBK said, "We have confirmed evidence that KRW 9.36 billion in Korea Zinc funds was used in the process of regaining control of Imagine Asia, a KOSDAQ-listed company that associates of Ji Chang-bae, CEO of Won Asia Partners, who is known to be close to Chairman Choi Yun-beom, had previously owned through a family company before selling."

According to Young Poong and MBK, Korea Zinc acquired commercial paper (CP) issued by a newly established company, and the funds it provided were used, through several intermediate companies, to secure a controlling stake in Imagine Asia. Three weeks later, funds from a Won Asia Partners fund newly capitalized by Korea Zinc were injected into an intermediate company, which used the money to repay Korea Zinc's CP, they said. They explained that although Korea Zinc's direct investment was nominally recovered, the fund capitalized by Korea Zinc retained the ultimate risk of investment losses.

Specifically, a review of Korea Zinc disclosures, corporate registry records and related transaction records found that Korea Zinc acquired KRW 9.36 billion worth of CP issued by Young Media ENT in December 2019. Young Media ENT had been established less than a year earlier and reportedly had no significant operating results or business base at the time.

On the day it received the funds, Young Media ENT transferred them to DK E&M in the form of loans and payments for the acquisition of shares. DK E&M acquired all shares of Live Entertainment that same day, and Live Entertainment participated in a rights offering by Imagine Asia the following day, retaining its position as the largest shareholder. Young Poong and MBK explained, "Funds originating from Korea Zinc passed successively through Young Media ENT, DK E&M and Live Entertainment and were used to secure control of Imagine Asia."

Three weeks later, Korea Zinc made a new investment of KRW 9.6 billion in the Korea Growth No. 1 Fund managed by Won Asia Partners. On the day the funds were deposited, the fund purchased DK E&M shares held by Young Media ENT and acquired newly issued shares in DK E&M. DK E&M used the funds raised in this way, among other sources, to repay the money it had borrowed from Young Media ENT, which then used the money to repay Korea Zinc's CP.

Young Poong and MBK pointed out, "In effect, both the initial funding and the source of the funds used to repay the CP came from Korea Zinc. The CP directly acquired by Korea Zinc was repaid, but the risk of investment losses was merely transferred to a fund capitalized by Korea Zinc as the nature of the investment changed from debt to equity."

Young Poong and MBK said that the fund capitalized by Korea Zinc repaid the funds initially provided by Korea Zinc and ultimately assumed the risk of losses. They added, "Given the repeated flow of funds, which is identical to the suspected indirect financial support for Chungho Comnet, the authorities must thoroughly investigate whether company funds were misappropriated for private purposes."

A representative of Young Poong and MBK Partners said, "Choi Yun-beom was Korea Zinc's CEO at the time. The relevant authorities must thoroughly investigate who proposed and approved the transaction, whether its business prospects, likelihood of recovering the investment and potential conflicts of interest were properly reviewed, and whether the transaction's actual structure and the ultimate use of the funds were transparently reported to the board."

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