Youngpoong Precision sues Youngpoong board for 930 billion KRW in damages... "Company loss due to breach of trust"

"Company Damaged by Secret Collusion with MBK"
"Estimated Loss of 930 Billion Won Considering Call Option"

Youngpoong Precision has filed a shareholder derivative lawsuit worth approximately 930 billion KRW against Youngpoong's Advisor Jang Hyung-jin, CEOs Park Young-min and Bae Sang-yoon, and three other registered directors. Following a previous criminal complaint accusing Youngpoong's current and former management of breach of trust, the company now intends to hold them strictly accountable for the damages caused to the company due to their breach of fiduciary duties.

On the 13th, Youngpoong Precision announced that on the 10th it filed a shareholder derivative damages lawsuit at the Seoul Central District Court against Youngpoong Advisor Jang Hyung-jin, CEOs Park Young-min and Bae Sang-yoon, and outside directors Park Byung-wook, Park Jung-ok, and Choi Chang-won, totaling five registered directors.

Youngpoong Precision claims that during Youngpoong's cooperation with the private equity fund MBK Partners for the hostile takeover (M&A) of Korea Zinc, various breach of fiduciary acts caused irreparable damage to the company and ultimately harmed the shareholders. The estimated damage amount is at least 930 billion KRW.

The complaint also details the problems with the 'Management Cooperation Agreement' between Youngpoong and MBK and the extent of the damages suffered by the company as a result.

Youngpoong waived its independent voting rights over the Korea Zinc shares it holds and those it would acquire through a public tender offer. Specifically, Youngpoong agreed to exercise voting rights jointly with MBK for director appointments and to mutually cooperate on voting rights for major management decisions.

As a result, at the end of the tender offer period, MBK effectively exercised the status and authority of the largest shareholder of Korea Zinc despite holding only 5.32% of the combined 38.47% stake jointly secured with Youngpoong.

Furthermore, Youngpoong Precision pointed out that Youngpoong unilaterally granted MBK a call option on favorable terms without any compensation. MBK was given the right to exercise a call option allowing it to hold one more share than Youngpoong, which is also considered a breach of fiduciary duty.

Youngpoong Precision believes that this allowed MBK to gain enormous economic benefits relative to its invested capital, while causing significant losses to Youngpoong shareholders. If MBK exercises the call option, it is expected to purchase shares held by Youngpoong and its affiliates at the initial tender offer price of 660,000 KRW per share. Youngpoong has not disclosed the specific contents of the management cooperation agreement.

Previously, Youngpoong stated that if Korea Zinc shares were sold in the future, the stock price would exceed 1 million KRW. Assuming MBK’s call option exercise price remains at the initial tender offer price of 660,000 KRW per share, MBK would be able to buy shares at least 340,000 KRW cheaper per share, according to Youngpoong Precision’s calculations. Based on the total number of shares, MBK could exercise the call option on approximately 2.74 million shares, resulting in an economic benefit of at least 930 billion KRW for MBK and a corresponding massive loss of 930 billion KRW for Youngpoong shareholders.

Meanwhile, Youngpoong Precision previously filed a criminal complaint with the prosecution accusing Advisor Jang Hyung-jin, three outside directors, MBK Partners, and Vice Chairman Kim Kwang-il of breach of trust, suspecting that the company’s two CEOs were both detained due to a major accident in September and that the company’s most critical assets were transferred under conditions favorable to MBK through a management cooperation agreement. The criminal case is currently assigned to the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office, which is reviewing the related matters.

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