MBK: "'Security Issue' Framing by Korea Zinc Is a Tactic to Distract from Risks"

On March 13, MBK Partners criticized Choi Yoonbum, Chairman of Korea Zinc, for highlighting the investment from China Investment Corporation (CIC) and raising a 'security issue,' stating, "This is merely an attempt to divert attention to another issue in order to deflect market concerns about governance failures and a variety of risks surrounding himself." MBK emphasized that the core issue in the current dispute is not the investor composition, but the internal corporate governance problems at Korea Zinc.

MBK stated, "ISS, the world’s largest proxy advisory firm, has already defined the essence of this matter as a corporate governance issue." ISS, in its Korea Zinc annual general meeting report released on March 9, recommended a vote 'against' the reappointment of Chairman Choi as an inside director. The report pointed out questionable governance practices, such as the high-priced share buyback, a 25% discounted public offering, limiting voting rights of Young Poong through a circular shareholding structure, and large-scale investments made without sufficient board review. It stated that an independent board and strengthened internal controls are necessary to restore investor confidence.

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MBK further explained that the CIC investment, which Chairman Choi has raised as a problem, accounts for only about 5% of the total commitments of MBK Fund VI, while the remaining 95% consists of global institutional investors such as pension funds and public institutions from North America, Europe, and the Middle East. MBK also pointed out that CIC is a representative institutional investor that has invested in major global private equity funds such as Blackstone, Carlyle, and KKR.

MBK emphasized, "The fact that ISS recommended voting against Chairman Choi’s reappointment is an assessment based on international standards regarding the repeated governance controversies," adding, "Rather than diverting attention to other issues, it is time to provide a responsible response to the governance problems raised by the market and advisory firms." MBK continued, "Korea Zinc is not a tool for maintaining the management rights of a specific individual, but an asset for all shareholders," adding, "Establishing a transparent and independent governance structure is the starting point for protecting corporate value and market trust."

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