Proxy advisor backs Korea Zinc nominee, warns against MBK Partners candidate

Proxy advisor Sustinvest has recommended shareholders back a director candidate put forward by Korea Zinc, while opposing one nominated by MBK Partners and Young Poong ahead of an upcoming extraordinary general meeting. The decision centers on the suitability of candidates to serve on the audit committee, a critical role in overseeing financial reporting and internal controls.

Sustinvest highlighted the accounting and auditing experience of Baek In-kyu, the candidate proposed by Korea Zinc, noting his extensive background with Deloitte Anjin Accounting Corp. This expertise, the advisor stated, is directly relevant to the core duties of an audit committee member.

In contrast, while acknowledging the expertise of Park Yoo-kyung, the candidate from MBK Partners and Young Poong, in responsible investment and corporate governance, Sustinvest expressed concerns. The advisor pointed to recent penalties against Korea Zinc for accounting violations and internal control issues, emphasizing the increased importance of oversight in these areas. Consequently, Baek's qualifications were deemed more directly aligned with the audit committee's responsibilities.

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At this time, if management control shifts to MBK/Young Poong, the continuity of existing management strategies may weaken, and uncertainty may increase in the process of large-scale facility investment and major strategic business promotion.

Beyond individual qualifications, Sustinvest considered the broader implications for shareholder value. The report suggested that a change in management control to MBK/Young Poong could weaken the continuity of existing strategies and introduce uncertainty into large-scale investments and new business initiatives. Given the capital-intensive nature of non-ferrous metal smelting, requiring long-term investment recovery, stringent environmental and safety regulations, and specialized industry knowledge, Sustinvest concluded that maintaining the current management and its long-term strategy would better serve the overall long-term interests of shareholders.

The recommendation comes amid escalating tensions between Korea Zinc and the consortium of Young Poong and MBK Partners. Young Poong has accused Korea Zinc of disseminating false and distorted information in its shareholder materials and has threatened legal action. MBK Partners has also demanded corrections to alleged factual inaccuracies in Korea Zinc's communications. Korea Zinc has, in turn, asked Young Poong and MBK to specify the inaccuracies, but Young Poong has stated they have already communicated these points directly and will not engage in further public exchanges.

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We will actively communicate with market participants, do our best to improve governance and enhance shareholder value, and steadily push forward new growth strategies such as Project Crucible and Project Troika Drive.