Youngpoong and MBK Partners have clarified the controversy surrounding their call option agreement related to Korea Zinc shares. KZ Precision, a shareholder of Youngpoong and Korea Zinc, has filed a shareholder representative lawsuit, claiming that the agreement is unfavorable to Youngpoong.
According to industry sources on October 19, KZ Precision has alleged that Youngpoong's management entered into a detrimental contract two years ago to secure control of Korea Zinc.
The call option price is reportedly set at 700,000 won per share, with an additional annual 5% premium. This price is lower than the final public offering price of 830,000 won that MBK presented to general shareholders at the time. KZ Precision has raised concerns that this agreement could lead to Youngpoong selling its Korea Zinc shares at a relatively low price, potentially harming both the company and its shareholders.
In response, Youngpoong and MBK Partners stated, "The call option has not yet been exercised, and MBK Partners does not plan to exercise it before recovering its investment in Korea Zinc." They further explained, "The mere passage of two years does not result in the transfer of shares; additional contractual conditions must be met for investment recovery."
They also noted that Youngpoong holds a put option, which allows it to sell at the same price, providing a safeguard against potential declines in Korea Zinc's stock price. This means that even if the stock price falls, Youngpoong can still demand a sale at the agreed price, ensuring downside protection.
Furthermore, they emphasized that the option exercise amount increases annually, and Youngpoong will receive dividends separately. They argued that a simple comparison of the final public offering price and the option's base price is not valid. According to both parties, the exercise amount will increase by 35,000 won per share annually, resulting in a price of 770,000 won per share after two years. Any dividends received before the exercise will belong to Youngpoong.
* This article has been translated by AI.
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