Korea Zinc Chairman Steps Down Amid Scrapped $1.8 Billion Share Sale
Korea Zinc Co.'s chairman, Choi Yun-beom, will step down from his role as the head of the board after canceling a planned $1.8 billion share sale. The decision is seen as an attempt to address concerns from the company's largest shareholder amid an ongoing battle for control.
The world's largest refined zinc producer announced on Wednesday that Choi's role would be split, allowing him to remain as chief executive while bringing in an independent chairman to lead the board. Following the news, Korea Zinc shares fell by as much as 18.1%, closing the day down 14.1% at 4.46 euros on the XETRA exchange.
"The aim is to increase the board's independence," Choi stated, adding that he would continue efforts to persuade stakeholders to move forward. His resignation is perceived as an olive branch in response to a months-long control struggle.
The share sale plan, announced two weeks ago, had sparked a selloff in Korea Zinc's stock and triggered an investigation by the Financial Supervisory Service, South Korea's financial watchdog, which scrutinized the company's corporate governance practices. The plan lacked specifics, including details about the decision-making process and due diligence, which led the watchdog to order revisions. This rapid intervention raised doubts about the feasibility of the share sale.
Korea Zinc mentioned in a regulatory filing that it had considered feedback from market participants and investors before deciding to cancel the share sale. While the retreat was expected, it dealt a setback to Choi's efforts to secure support from shareholders and employees, who were set to receive a portion of the new stock. The scrapped plan may also delay initiatives to reduce the company’s debt.
This development follows two months of public disputes over Korea Zinc's direction and strategy. The dispute began in September when private equity firm MBK Partners teamed up with Korea Zinc's largest investor, Young Poong Corp., to launch an unsolicited takeover bid, securing 39.8% control of the company. In response, Choi, the grandson of one of the company founders, arranged a share buyback involving Bain Capital, which provided his side with over 35% ownership.
