Korea Zinc Chairman Choi Yoon-beom is reportedly considering a buyback of shares held by private equity firm Bain Capital. This potential move could solidify his position amid an ongoing control dispute with Young Poong and MBK Partners.
Industry sources reported Friday that Choi’s team is exploring financing options to reacquire Bain Capital’s 2.01% stake in Korea Zinc. Options being considered include a direct repurchase or securing new financial partners to acquire the shares.
Choi and Bain Capital initially formed an alliance in October 2024, signing a shareholder agreement to jointly pursue additional Korea Zinc shares through tender offers.
While specific terms of the agreement remain confidential, it reportedly covered the joint exercise of voting rights and limitations on share transfers. Crucially, it granted Choi an option to repurchase Korea Zinc shares held by Bain, either directly or through a designated third party.
Through a tender offer, Bain initially acquired a 1.41% stake in Korea Zinc via the investment vehicle Troika Drive Investment. Subsequent open-market purchases increased their holdings to 2.01%, totaling 419,082 shares.
Based on Korea Zinc’s closing stock price of 1.63 million won ($1,090) on Friday, the stake is valued at approximately 684 billion won ($457 million).
Industry analysts suggest the potential buyback could mirror the execution of put-and-call options, potentially guaranteeing Bain a predetermined rate of return. Consequently, the ultimate acquisition cost may exceed the current market value of the shares.
One potential funding strategy for Choi involves leveraging his personal Korea Zinc stock holdings. He currently owns 1.55% of the company, an amount valued at approximately 525 billion won.
Choi and his allies, including Crucible JV (Korea Zinc’s joint venture with the US government), currently control 38.7% of the company. Their rivals, a coalition of Young Poong and MBK Partners, hold a combined 46%.
While Choi’s group gained an edge in previous proxy battles by limiting the rival faction’s board representation, uncertainties persist as several board member terms are expiring and the potential for cumulative voting looms.
Korea Zinc’s board comprises 19 directors, although four are currently suspended. Choi’s side controls 11 seats, while the Young Poong–MBK alliance holds four.
The shareholder landscape is expected to remain a key focus in the lead-up to Korea Zinc’s annual general meeting on March 24.
silverstar
