Court orders Young Poong, MBK to disclose Korea Zinc documents as part of unfair transaction probe

A Seoul court has ordered Young Poong and MBK Partners to disclose contractual documents from their attempt to acquire control of Korea Zinc, to verify whether they engaged in an unfair transaction involving the discounted sale of Korea Zinc shares.

Korea Zinc headquarters in central Seoul. [NEWS1]

A Seoul court has ordered Young Poong and MBK Partners to disclose contractual documents they executed during their attempt to acquire management control of Korea Zinc, a step aimed at verifying whether the two parties engaged in an unfair transaction involving the discounted sale of Korea Zinc shares.

The Seoul Central District Court recently granted a document submission request filed by KZ Precision, a subsidiary of Korea Zinc, against Young Poong. The ruling requires advisory figures, including Young Poong's former CEO Jang Hyung-jin, to submit the original shareholder agreement with MBK and subsequent amendments.

The key to the ruling is whether the agreement facilitated Young Poong’s guarantee that MBK Partners could acquire a portion of Korea Zinc shares at a specific, preferential price.

MBK Partners in September entered into a shareholders’ agreement with Young Poong aides, agreeing to jointly exercise voting rights. As part of the deal, it was granted call options on certain shares owned by Young Poong and its affiliates.

However, the exercise price wasn’t disclosed in public filings, sparking speculation that Young Poong may have fixed the price or linked it to MBK’s public tender offer price.

Korea Zinc has filed a shareholder derivative lawsuit against Young Poong, arguing that such a call option constitutes a breach of fiduciary duty to Young Poong’s shareholders.

For Young Poong, the Korea Zinc shares represent a critical asset in terms of cash flow, as the company has been receiving roughly 100 billion won ($62.3 million) annually in dividends from Korea Zinc. The dividends have served as a vital source of funding for Young Poong operations, especially during the past three consecutive years of massive losses, which has raised criticism that the deal could amount to a breach of fiduciary responsibility.

Korea Zinc Chairman Choi Yun-birm speaks during a press conference held in central Seoul on Dec. 31, 2025. [YONHAP]

If the court decides that contractual documents verify the veracity of Korea Zinc’s claims, it is widely anticipated that the lawsuit would tilt in favor of Korea Zinc.

“The market and shareholders must have a clear resolution regarding the price and terms under which Korea Zinc shares, Young Poong’s most valuable asset, was transferred to MBK Partners,” KZ Precision said in a statement.

“If the allegations raised in the media are substantiated, key decision-makers and executives, including Jang, are likely to face significant liability in the shareholder derivative suit and potential damages claims.”

Meanwhile, Korea Zinc said Friday it has completed payment for a third-party share issuance allocated to the Crucible joint venture, in which the U.S. government participates as a major stakeholder. Korea Zinc's board on Dec. 15, 2025, approved a $7.4 billion investment to build a smelting facility in Clarksville, Tennessee.

The transaction effectively opens the door for the United States to indirectly acquire an estimated 10 percent stake in Korea Zinc, a development that gives Chairman Choi Yun-birm somewhat of an upper hand in his ongoing battle for management control against the Young Poong–MBK alliance.

The stake held by shareholders aligned with Choi is expected to rise to around 40 percent. Considering the interest of Korea’s National Pension Service, which holds a 4.8 percent stake and is widely viewed as a potential swing voter, Choi's side may surpass the 42.1 percent held by Young Poong and MBK.

“With the listing date for the newly issued shares set for January 9, we plan to begin site development in 2026 and commence phased commercial production starting in 2029,” Korea Zinc said.

“The facility will produce 13 categories of materials, including industrial base metals such as zinc, lead and copper, as well as antimony, indium and bismuth, and of them, 11 are included on the U.S. government’s 2025 Critical Minerals List," it added. "Our goal is to process 1.1 million tons of raw materials annually and produce 540,000 tons of finished products.”

BY SARAH CHEA [chea.sarah@joongang.co.kr]