Korea Zinc rebuffs MBK, Young Poong breach-of-trust allegations as 'baseless'

Korea Zinc strongly rebuffed MBK Partners and Young Poong over their allegations that Chairman Choi Yun-beom and associates made advance investments in an unlisted company, saying the two parties were "stitching together partial facts and interpreting them arbitrarily to make it appear as though new allegations have surfaced." The company reaffirmed its position that investment decisions and fund disbursements are the exclusive prerogative of the fund manager, and said it would not hesitate to take legal action against any conduct that damages corporate and shareholder value.

Korea Zinc issued a statement Monday saying that "despite repeated explanations that this was part of normal investment activity, MBK and Young Poong continue to spread unverified assumptions and one-sided claims, causing confusion among the market and shareholders."

The dispute flared after MBK and Young Poong alleged Monday that Choi and his associates had engaged in breach of trust and self-dealing by investing ahead of the company in Arc Media, an unlisted drama series production company.

MBK and Young Poong claimed that after Korea Zinc committed about 23.6 billion won ($17.6 million) to the One Asia Partners fund in May 2020, Choi and his associates secured stakes in Arc Media during the 59-day window before the fund actually deployed its capital. They pointed to the fund's subsequent 25 billion won investment in Arc Media as evidence of a premeditated scheme to benefit insiders. They also took issue with the fact that one of the associates who acquired shares was appointed as an outside director and audit committee member at Korea Zinc the following year.

Korea Zinc rebuffed the claim as a distortion of how fund structures work. The company said it was merely a limited partner in the One Asia Partners fund, and that decisions on specific investment targets, timing and capital deployment rest solely with the general partner.

"The specific investment plans and disbursements of a fund are matters led by the general partner through investment review and due diligence," Korea Zinc said. "The claim that Korea Zinc deliberately held company funds in reserve for the benefit of a specific individual is an arbitrary assumption unsupported by objective evidence."

Korea Zinc said MBK and Young Poong were selectively interpreting certain transaction timings to suit their own narrative, using terms such as "premeditated breach of trust" and "self-dealing." The company said repeating existing allegations without new facts or concrete proof amounted to a public-opinion campaign aimed at seizing management control.

Korea Zinc also went on the offensive by raising issues it said MBK and Young Poong each face.

On MBK, the company cited regulatory sanction proceedings and national audit criticism related to the Homeplus situation. Korea Zinc said MBK justifies its own investment and management problems by citing business conditions or market changes, while leveling breach-of-trust allegations against another company's investments based on nothing more than conjecture.

On Young Poong, Korea Zinc said environmental contamination and delays in soil remediation at the Seokpo smelter were cause for concern. It also raised Young Poong's history of regulatory sanctions over accounting irregularities — including the understatement of provisions related to soil cleanup — and questioned whether the company was in any position to raise concerns about management transparency.

Korea Zinc said it must stay focused on future projects, including the construction of a smelter in the United States and the expansion of its critical minerals supply chain. The company said MBK and Young Poong should end the unproductive dispute and cooperate as shareholders to enhance corporate value.

"We will provide accurate information to shareholders and the market based on objective facts, and will respond resolutely — including through legal action — to any conduct that damages the reputation of the company and its management or undermines corporate and shareholder value through unverified allegations and arbitrary assumptions," Korea Zinc said.