November 22, 2024

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Korea Zinc Vice Chairman and CTO Lee Je-joong speaks on the firm's opposition against a tender offer launched by MBK Partners to gain management rights of the world's biggest refined zinc producer during a press event held at Korea Zinc's headquarters in Seoul, Tuesday. (Yonhap)

The vice chairman of Korea Zinc on Tuesday strongly condemned a takeover attempt by its major shareholder Young Poong, which teamed up with private equity firm MBK Partners for the bid, calling it a “predatory action” that would lead to the outflow of homegrown technology and put the country’s industrial competitiveness under threat.

“Non-ferrous metals are a vital industry that supplies key raw materials to major domestic industries such as automobiles, semiconductors and steel, and we cannot tolerate such predatory behavior by a speculative capital called MBK that is trying to gobble up Korea Zinc with Chinese capital at its back,” said Korea Zinc Vice Chairman and Chief Technology Officer Lee Je-joong during a press conference held at the firm’s headquarters in Seoul.

The world’s largest refined zinc producer is seeking to fend off MBK Partners’ bid to become the firm's largest shareholder with a 2 trillion won ($1.5 billion) tender offer for shares in Korea Zinc. The offer will be closed on Oct. 4.

Bringing the CTO, who worked with the company for 40 years, to the forefront of this battle is to tout the technology the firm has accumulated over decades.

“MBK Partners can never manage Korea Zinc,” he said. “If management rights are handed over, all of our engineers will quit.” Some 20 senior engineers of the company sat alongside Lee during the event.

Since the launch of the public tender offer, two parties -- MBK backed by Young Poong and Korea Zinc have entered a tug-of-war to woo support from shareholders and public consensus on who would be the proper party to have the controlling management rights of the zinc smelter.

Lee’s biggest concern is the possible leakage of key national technologies in the event of Young Poong-MBK’s successful takeover and their incompetence of operating the business.

“Young Poong stays afloat by receiving huge dividends from Korea Zinc every year and only focuses on purchasing Korean Zinc stocks. It is not interested in efforts and investments to normalize its own Seokpo refinery,” he said.

Attempting to prove his assertion in numbers, Lee went on to say that Korea Zinc engages in 12 types of non-ferrous smelting, while Young Poong only engages in two types. Lee’s firm has logged profits for 98 consecutive quarters since 2000, while Young Poong suffers from losses.

Earlier in the day, MBK Partners released a statement to stakeholders involving Korea Zinc, including its employees, business partners, labor union and shareholders, saying speculations suggesting that the equity fund would sell out the zinc producer’s technology to foreign capital are “false and groundless.”

“Some are misleading us into thinking that if we secure management rights to Korea Zinc, all new growth businesses the company is pursuing will be halted. … It is a groundless speculation and unrealistic claim,” the statement read.

What Korea Zinc does is critical to the Korean industries, it said. “We will invest for the long term and conduct investment activities in a way that members of the Republic of Korea can accept and in a way that can contribute to the Korean economy.”

By Park Han-na (hnpark@heraldcorp.com)