Korea Zinc warns MBK Partners, Young Poong of legal action over 'false' fund-loss claims

Korea Zinc has warned MBK Partners and Young Poong of a strong response, including legal action, accusing the two shareholders of repeatedly making false claims about the company's fund investments and sowing confusion in the market.

In a statement issued Thursday, Korea Zinc said MBK Partners and Young Poong were "misleading the market by using crafty terms such as 'uncertain recovery' and 'risk of loss' regarding a specific fund investment made by a general partner with which Korea Zinc has contracted as a limited partner."

Korea Zinc said the investment in question "has never been recorded as a loss against acquisition cost, from the past to the present," and stressed that "a simple comparison is not possible because the acquisition timing and cost differ from those of the entertainment company they mentioned."

Korea Zinc went on to say that MBK Partners and Young Poong had gone further, making "defamatory false claims — without verifying any facts — suggesting that certain individuals recovered their personal investments just as they were facing losses."

Korea Zinc added that it "invests surplus funds transparently and reasonably in financial products such as funds, in accordance with relevant laws and internal procedures, for financial investment purposes," and that as a limited partner in the relevant funds, "the specific investment plans and execution are led by the general partners." It said MBK Partners and Young Poong were "distorting the facts by portraying Korea Zinc, as an LP, as if it had directly selected specific companies and injected company funds itself."

Korea Zinc also accused the two parties of applying a "classic double standard" — explaining away their own investment outcomes as the result of changing business conditions and market environments, while labeling another company's investment a "loss" based on false claims and forced assumptions before any recovery had even been completed. The company vowed to "respond strongly, including through legal action, against any conduct that damages the reputation of the company and its management or undermines corporate and shareholder value through unverified assumptions or claims contrary to fact."

Meanwhile, MBK Partners and Young Poong said in their own statement Thursday that they had found evidence suggesting that Korea Zinc director Choi Yun-beom and his relatives had recovered most of their personal investment in Arc Media before Korea Zinc's fund investment of 29 billion won ($21.2 million) in an unlisted entertainment company faced a risk of loss.