Where Will the 'Third Vote' Go at Korea Zinc's Extraordinary General Meeting? Eyes on Hanwha and LG's Choice [fn Market Watch]

[Financial News] Korea Zinc's management dispute is now turning to Hanwha Group and LG Chem Ltd. as the next battleground. Youngpoong Corporation and MBK Partners have sent shareholder letters directly to the two companies ahead of the extraordinary shareholders' meeting on Sept. 9, asking them to support independent audit committee candidates.
In particular, they are pressing the point that Hanwha Group and LG Chem Ltd. have so far signaled that they are not friendly shareholders to the side of Korea Zinc director Choi Yun-beom. Their argument is that how the two companies vote in this audit committee election could serve as a test of their neutrality.
According to the investment bank industry on the 28th, Youngpoong Corporation and MBK Partners sent shareholder letters to Hanwha Group and LG Chem Ltd., both major shareholders of Korea Zinc, asking them to support outside director Park Yu-kyung, who is running for a separately elected audit committee seat at the Sept. 9 extraordinary shareholders' meeting.
Youngpoong Corporation and MBK Partners have framed the vote not as a simple fight over management control, but as an issue of 'audit committee independence.' They argue that if Hanwha Group and LG Chem Ltd. are not friendly shareholders of Director Choi's camp, then supporting an audit committee member independent from management would be consistent with their existing stance.
The investment banking industry sees the letter as effectively placing the two shareholders on a public stage where they must choose. Because separate election of audit committee members comes with voting restrictions, the vote math differs from that of ordinary director appointments. That is why the choices made by Hanwha Group and LG Chem Ltd. have emerged as a key variable in the showdown.
Youngpoong Corporation and MBK Partners have also pointed to Korea Zinc's recent investigations and investment controversies as reasons why audit committee independence is needed. They cited the SFC's sanctions related to accounting reviews, the NTS's special tax audit, and KFTC deliberations over cross-shareholding structures using overseas affiliates.
They also revived allegations that One Asia Partners used Korea Zinc funds for follow-on investments in unlisted entertainment companies that Choi and his family had invested in first.
According to Youngpoong Corporation and MBK Partners, the funds invested in Arc Media, Hihet, and Slingshot Studio totaled 69 billion won. They claim that a large portion has not yet been recovered and that the financial condition of some of the invested companies has deteriorated.
They say this is not merely a matter of investment performance, but one that should be examined for conflicts of interest. They also criticized the current audit committee for failing to launch an independent investigation into the flow of funds and the investment decision-making process despite the allegations.
In the end, the key point to watch at this extraordinary meeting is more than just one audit committee seat. Youngpoong Corporation and MBK Partners are turning Korea Zinc's investment decision-making issues into a governance problem, while also asking major shareholders with business ties to Director Choi's camp to make a choice on independence.
Park was not directly nominated by Youngpoong Corporation and MBK Partners. She was selected through an open recommendation process and review by an external screening committee. After about 10 years in stock research, she spent roughly 17 years at global pension fund manager APG, where she handled corporate performance, capital allocation, financial policy, and governance.
In response to these criticisms and allegations, Korea Zinc directly rejected the claims raised by Youngpoong Corporation and MBK Partners regarding One Asia Partners' investment and the independence of the audit committee.
Korea Zinc said, "The company is only a limited partner (LP) in the fund managed by One Asia Partners, while the selection of individual investment targets and investment decisions were independently made by the general partner (GP)." It added, "They are repeating the same claims based on speculation and arbitrary interpretations without objective evidence."
It also argued, "With major global proxy advisory firms recommending against Youngpoong Corporation and MBK Partners' audit committee candidates, they are reviving past allegations and waging a public opinion campaign." On the financial authorities' accounting-related findings, it added, "We have sufficiently explained the relevant facts and will continue to do so in the follow-up process."
An investment banking industry official said, "This audit committee appointment is not only about whether to support or oppose a candidate. It is also a vote that shows how far major shareholders are willing to distance themselves from the current management." The official added, "Depending on Hanwha Group and LG Chem Ltd.'s choices, the shareholder landscape in Korea Zinc's management dispute could be reinterpreted after the extraordinary meeting."

[email protected] Kim Kyung-a Reporter