Korea Zinc Chairman Choi Yun-beom is reportedly exploring ways to buy back the stake in the smelter held by private equity firm Bain Capital, a move that could strengthen his position in the ongoing control battle with Young Poong and MBK Partners.
According to industry sources Friday, Choi’s camp has recently been seeking financing options to acquire Bain Capital’s 2.01 percent stake in Korea Zinc. Possible approaches include a direct buyback or bringing in new financial partners to take over the shares.
Choi and Bain allied in October 2024, signing a shareholder agreement to jointly acquire additional shares in Korea Zinc through tender offers.
While the details of the agreement were not disclosed, the deal reportedly included provisions on the joint exercise of voting rights and restrictions on share transfers. It also gave Choi the option to repurchase Korea Zinc shares held by Bain either directly or through a designated third party.
Through a tender offer, Bain initially secured a 1.41 percent stake in Korea Zinc under the investment vehicle Troika Drive Investment. The firm later increased its holdings through open-market purchases, bringing its stake to 2.01 percent, or 419,082 shares.
Based on Korea Zinc’s closing price of 1.63 million won ($1,090) on Friday, the stake is valued at about 684 billion won ($457 million).
Industry sources say the potential buyback could resemble the execution of put-and-call options, with Bain guaranteed a certain level of returns. As a result, the acquisition cost could exceed the current market value of the shares.
One possible funding option for Choi would be borrowing against his personal Korea Zinc holdings. He currently owns 1.55 percent of the company, equivalent to about 525 billion won.
Choi and his allies — including Crucible JV, Korea Zinc’s joint venture with the US government — currently control 38.7 percent of the company. Their rivals, an alliance of Young Poong and MBK Partners, hold 46 percent.
Although Choi’s side gained an advantage in earlier proxy fights by limiting the rival camp's board representation, uncertainties remain as several board terms are set to expire and cumulative voting could be introduced.
Korea Zinc’s board currently has 19 directors, though four are suspended. Choi’s camp controls 11 seats, while the Young Poong–MBK alliance holds four.
The ownership dynamics are likely to remain in focus ahead of Korea Zinc’s annual general meeting scheduled for March 24.
silverstar@heraldcorp.com
