Korea Zinc announced that it would start a share buyback with Bain Capital at a price of 830,000 won ($622), which is 80,000 won higher than the 750,000 won proposed by Young Poong and private equity firm MBK Partners, with the buyback set to conclude on Oct. 23.
The maximum acquisition stake is 18 percent, with 15.5 percent for Korea Zinc and 2.5 percent for Bain Capital. The investment firm will acquire shares of Korea Zinc but will not participate in its management, Korea Zinc said.
There are also no conditions for a minimum purchase quantity, eliminating the risk for investors who might participate in the buyback but later face losses due to a decline in share prices if they are unable to sell their holdings.
The total amount of funds that Korea Zinc and Bain Capital will invest for the buyback is 3.1 trillion won. Korea Zinc will bear around 2.7 trillion won, while Bain Capital will contribute around 400 billion won. Korea Zinc plans to secure 1.5 trillion won using its existing cash reserves, with the remainder to be financed through loans from financial institutions.
Korea Zinc has decided to retire all shares acquired in the buyback.
"The decision to buy back shares is a sincere effort to protect the company, its shareholders, employees, and partners, and to alleviate the concerns of the local community and the public," said Choi Yun-beom, chairman of Korea Zinc, during a press conference on Wednesday. "We will firmly enhance shareholder value by retiring all acquired shares."
The maximum amount of shares that Korea Zinc can currently acquire is 6.987 trillion won, citing the Capital Markets Act and the Commercial Act, the smelter said. This counters MBK and Young Poong's position, which states that Korea Zinc can only acquire up to 58.6 billion won in its own shares.
This move comes after a Seoul court on Wednesday allowed Korea Zinc to continue acquiring its own shares.
Young Poong and MBK Partners are attempting to gain management control of the world's largest zinc smelter by acquiring an additional stake of 7 to 14.6 percent through a tender offer that runs from Sept. 13 to Oct. 4.
The zinc smelter was co-founded in 1974 by Chang Byung-hee and Choi Ki-ho. Currently, the management of Korea Zinc falls under the Choi family, while the Chang family oversees Young Poong and its electronics affiliates.
Since Choi Yun-beom became chairman in 2022, competition for acquiring shares of Korea Zinc has intensified between the Choi family and the Chang family of Young Poong.
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