[Invest&Law] Who Will National Pension Raise Hands for at Korea Zinc's General Meeting?

Scheduled for March 28
Decisive Factor in the Power Struggle

Attention is focused on which side the National Pension Service (NPS) will take at the regular shareholders' meeting of Korea Zinc scheduled for March 28. The key agenda item at this shareholders' meeting is the appointment of new directors, and the NPS's choice is expected to be a variable that will determine the balance of power between the Yeongpung·MBK Partners alliance and Korea Zinc.

Yonhap News

At this shareholders' meeting, seven agenda items are expected to be presented, including setting a cap on the number of directors and appointing an outside director as the chairman of the board. Currently, the board of directors is composed of 11 members from the side of Chairman Choi Yoon-beom of Korea Zinc and 1 member from Yeongpung, forming an '11 to 1' structure. The Yeongpung·MBK side has nominated 17 candidates, including MBK Vice Chairman Kim Kwang-il. Korea Zinc has put forward 7 candidates. Depending on the outcome of the shareholders' meeting, the current board structure could be disrupted.

In terms of shareholding, the Yeongpung·MBK alliance holds 40.9%, giving them an advantage. Chairman Choi Yoon-beom's side holds 34.35% of the shares. However, there is also analysis that if the cumulative voting system, which favors minority shareholders, is applied, it could be advantageous to Chairman Choi's side. The cumulative voting system allows shareholders to concentrate their voting rights on specific candidates.

The NPS holds about 5% of Korea Zinc's shares. It is highly likely to play a casting vote role in the board's vote. However, as the possibility of losses from the Homeplus investment increases, it is uncertain whether the NPS will support the Yeongpung·MBK alliance led by MBK, the largest shareholder of Homeplus.

In 2015, the NPS invested a total of 612.1 billion KRW in MBK's acquisition of Homeplus, including 582.6 billion KRW in redeemable convertible preferred shares (RCPS) and 29.5 billion KRW in common stock. Since then, it has recovered a total of 313.1 billion KRW, including 94.2 billion KRW in principal and 218.9 billion KRW in profits, but considering the agreed-upon rate of return at the time of investment, about 900 billion KRW remains unrecovered. With Homeplus filing for corporate rehabilitation with the court on March 4, the likelihood of recovering the remaining principal and expected profits has decreased significantly. In February, when the NPS committed to investing in the MBK blind fund, it reportedly attached the condition that it would not participate in hostile takeover investment cases.

The result of the provisional injunction application filed by Yeongpung on March 17 to allow the exercise of voting rights is also expected to be an important variable in this shareholders' meeting. Korea Zinc attempted to restrict Yeongpung's voting rights by using regulations related to cross-shareholding. To avoid restrictions on cross-shareholding, Yeongpung established the limited liability company YPC and distributed all its Korea Zinc shares as an in-kind dividend. If the court accepts Yeongpung's claim, Yeongpung will not face restrictions on voting rights at this shareholders' meeting.

Im Hyun-kyung, Reporter, Legal Times

※This article is based on content supplied by Law Times.

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