SEOUL, South Korea–( BUSINESS WIRE )–Korea (KRX:010130) issued a statement today debunking false claims and misleading claims made by MBK Partners during a press conference held on December 10.
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Korean Zinc and Yeongbong Market Cap Chart (Chart: Korean Zinc)
MBK falsely claimed that Korea Zinc spent at least KRW 1.2 trillion under Chairman Yun B. Choi without proper board oversight, while also claiming that these investments caused a loss of company value of KRW 3.4 trillion.
To support these claims, MBK arbitrarily applied unfamiliar terms such as Lost EBITDA an opportunity (SO:), the lost value opportunity for the organization and the lost value opportunity for shareholders, is neither a standard in accounting practices nor widely recognized in financial analysis. Using speculative assumptions and unverified data, MBK attempted to mislead shareholders, the market, and the media, which greatly damaged the reputation of the Korean Zinc Company.
MBK claimed that if the Korean zinc company had set aside KRW582 billion used to invest in new businesses including resource recycling businesses, KRW569 billion used to invest in funds unrelated to the core business, and KRW900 billion used to buy back shares In other projects. It would have generated a value of KRW 3.4 trillion.
However, this assertion clearly demonstrates MBK's lack of long-term vision and understanding of the new business that Korea Zinc is pursuing. This also highlights MBK's inability to manage the company in an effective manner. MBK's interpretation of Korea Zinc's financial and business investment activities reflects a misunderstanding and appears to be based on a selective presentation of the data.
It is worth noting that MBK even included the cost of the stock buyback that Korea Zinc implemented to ward off its hostile merger and acquisition attempts, falsely claiming that it resulted in a loss in the company's value.
Lack of understanding of the zinc resource recycling business in Korea and lack of long-term institutional vision
First and foremost, Pedalpoint Holdings, including Igneo Holdings, is central to the resource recycling business and has made significant progress by strengthening the value chain while pursuing new business opportunities for future growth. As of the third quarter of this year, the enterprise's cumulative sales rose significantly to KRW 1.1656 trillion, while net losses decreased to KRW 30.7 billion, demonstrating concurrent improvements in business expansion and profitability. In particular, Pedalpoint Holdings is expected to address the challenges of securing the raw materials necessary to produce the future flagship product of “green” Korean zinc.
Specifically, Korea Zinc plans to increase its annual copper production capacity from 34,000 tons to 150,000 tons by 2028. To achieve this, the company acquired global scrap metal trading company Cataman Metals in April. In September, it acquired local robotics solutions company ROBOne with the aim of deploying Delta robots in US facilities to improve productivity.
The resource recycling market, especially the copper sector, has great growth potential. According to a recent International Energy Agency (IEA) report titled Recycling Critical Metals, global copper scrap volumes are expected to increase from 16 million tons in 2023 to 28 million tons by 2050, with scrap from electric vehicles and battery storage expected to grow. More than 35 times between 2030 and 2050.
MBK's assessment of Pedalpoint Holdings and Korea Zinc's resource recycling business focuses on short-term performance only. It ignores the fact that the resource recycling business is a new business area, serving as a strategic growth driver for the future, and shows their lack of understanding of business structure and long-term value. This reveals MBK's fundamental lack of understanding of the Korean Zinc Troika and also confirms MBK's inability to drive new business initiatives.
Furthermore, Korea Zinc would like to emphasize that the decision to invest in Igneo Holdings came after a comprehensive evaluation and analysis conducted over more than a year. This included assessing the company's value, securing equity ratios, determining investment allocations, and reviewing board structures. Comprehensive due diligence has been conducted with several global consulting firms on financial, legal and environmental aspects. Investment advisory was handled by a global investment advisory firm, which performed coordination and evaluation reviews. Korea Zinc's technical team also conducted technology evaluations.
These procedures were communicated to management and reviewed by the Board of Directors prior to final approval. Even Young Poong's advisor Jang Hyung-Jin agreed to the deal on two occasions. Despite this, Mohammed bin Salman is now making unsubstantiated allegations about this matter.
MBK's distortion of the nature of financial investments
MBK also misinterpreted the nature of financial investments such as fund investments. Some of these funds were liquidated early, and the capital has since been successfully recovered. Other funds even made profits.
However, MBK falsely claimed that these fund investments resulted in complete losses. They made a speculative argument, saying that redirecting the money to business investments would have prevented damage to the value of companies, a claim that lacked any credible basis.
MBK's misleading assertions regarding share repurchase costs
MBK also criticized Korea Zinc for purchasing treasury shares through a stock buyback program, which was launched to address MBK's hostile takeover attempt. Their claim that this action negatively affected the value of Korea Zinc lacks evidence and raises questions about the determination of liability.
Industry experts unanimously agree that Korea Zinc would not have incurred the share buyback costs had it not been for MBK's aggressive M&A attempt. If this capital were used in new business investments, it could have generated billions in enhancing corporate value. Moreover, MBK's actions increased Korea Zinc Corporation's debt and weakened its investment capacity, which greatly harmed the company's value.
A recent employee survey also revealed that a large number of Korea Zinc employees are experiencing tremendous pressure due to MBK's aggressive merger and acquisition attempt. This has disrupted daily operations and seriously damaged Korea Zinc's corporate competitiveness and human resources.
Overlooking partner Young Bong's low corporate value and weak management
MBK has turned a blind eye to the severe erosion in the corporate value of Young Poong, its partner in the hostile M&A against Korea Zinc.
For listed companies such as Korea Zinc, the value of the company is generally measured by market capitalization. From March 22, 2019 to September 12, 2024, the market value of the Korean Zinc Company increased from KRW 8.7085 trillion to KRW 11.511 trillion, an increase of 32.2%. In contrast, Young Poong's market capitalization decreased from KRW 1.5252 trillion to KRW 547.1 billion, a decrease of 64.1%.
A representative of Korea Zinc said that MBK is disparaging Korea Zinc, which has risen to become a global leader in non-ferrous metals with the support of employees, shareholders and local communities, by distorting statistics and making unsubstantiated claims. Moreover, through its aggressive M&A attempt, MBK is hurting the value of the Korean zinc company.
They added that in line with the vision and long-term plans reiterated at the Investor Day last December, Korea Zinc will steadily pursue its goals of achieving sales of KRW 25 trillion by 2033. This includes developing renewable energy, secondary battery materials and resource recycling. Companies.
View source version on Businesswire.com: https://www.businesswire.com/news/home/20241215499770/en/
korea zinc
Dongwu Park
+82-2-6947-2469
dwpark@koreazinc.co.kr
Source: Korea Zinc Co., Ltd
