Korea Zinc Chairman Yun B. Choi Announces Steps to Strengthen Board Independence and Defend Against Hostile M&A

At today’s press conference, Yun B. Choi, Chairman of Korea Zinc (KRX:010130), the world’s leading non-ferrous metal smelting company, announced strategic initiatives to enhance the company’s corporate governance, transparency and shareholder engagement. He committed to fortifying board independence, enhancing corporate governance and increasing protection and engagement for minority shareholders, making Korea Zinc a company that listens more closely to its stakeholders. As part of these measures, Korea Zinc will advance plans to have an independent director serve as Chair of the Board.

Chairman Choi stated, “We humbly and sincerely apologize for the market turmoil and shareholder and investor concerns that occurred during the general public offering process.” He added, “I will step down as Board Chair at the earliest opportunity, and, with an independent director taking on this position, our board’s independence will be further strengthened.” He announced that this change would be formalized at a forthcoming shareholders’ meeting.

Expanding Diversity and Global Communication at Board Level

Korea Zinc will also enhance board diversity and shareholder communication. To meet global standards as the world’s top non-ferrous metal company, the board plans to appoint a foreign independent director to improve engagement with overseas investors. Additionally, the board is considering appointing a dedicated investor relations (IR) director, tasked with directly conveying shareholder feedback to the board and management. This initiative is designed to incorporate international perspectives and shareholder voices into the decision-making process as Korea Zinc moves toward future growth.

Shareholder-friendly Policies and Enhanced Dividend Return

Korea Zinc, which has already introduced interim dividends, plans to establish quarterly dividends to provide shareholders with regular returns and stable cash flow. Dividends will be determined before the record date, improving predictability and the company’s credibility. Just a year after implementing interim dividends, Korea Zinc now aims to deliver more consistent returns to its shareholders and support stable cash flow.

Strengthening Minority Shareholder Protections

To further protect and enhance the rights of minority shareholders, Korea Zinc plans to formalize these protections in its articles of incorporation. The company will implement Majority of Minority (MOM) voting mechanisms for specific matters where the interests of controlling and minority shareholders may diverge, ensuring that decisions reflect the preferences of minority shareholders.

Through these steps, Korea Zinc aims to secure the confidence and support of shareholders committed to its long-term growth and development, preserving the company’s value against hostile takeover attempts by MBK Partners and Young Poong.

Commitment to Stakeholders

Chairman Choi said, “Korea Zinc plays a vital role in our country’s industrial infrastructure and must contribute to economic growth, safeguard a long-term perspective and serve as a cornerstone of the nation’s economy.” He emphasized that with the backing of shareholders who have consistently chosen the right path for the company’s long-term growth and shareholder value, Korea Zinc will continue fending off hostile takeovers.

Addressing shareholders directly, he added, “The ultimate fate of Korea Zinc rests with our many loyal shareholders who believe in the company. Listening to your feedback has given us hope and confidence.”

Challenges Facing Young Poong and MBK Partners’ M&A Bid

Recently, MBK and Young Poong have lost credibility in the face of mounting setbacks. Young Poong’s Seokpo smelter was ordered to suspend operations for 60 days, with an additional 10-day suspension imposed for regulatory violations. Meanwhile, MBK has repeatedly failed to secure mandates from major public funds, undermining its reputation. Korea Zinc believes that defending against these hostile takeover attempts is the best way to protect the company’s value, competitiveness and its role as a national strategic industry serving Korea’s economy and citizens.

In addition, Korea Zinc explained the rationale for initiating a public offering for capital increase last month and why the decision was made to withdraw it in light of unforeseen circumstances.

Following the conclusion of MBK and Young Poong’s tender offer on October 14 and the court’s dismissal of an injunction to block Korea Zinc’s share buyback on October 21, Korea Zinc completed its buyback on October 23. However, contrary to expectations that the stock price would stabilize, the market reacted unpredictably.

Based on other share buyback and management dispute cases, there were widespread predictions that share prices would fall post-tender, and MBK and Young Poong promoted this view to entice investors into participating in their own tender offer. However, the market defied these expectations and share price volatility increased amid the legal uncertainties of the October 21 court ruling. Despite being unable to participate in the company’s share buyback after October 22, the stock continued to rise, defying market predictions. When the share buyback concluded on October 24, the stock hit the daily limit, intensifying market instability due to reduced liquidity from two prior buybacks.

In light of these market conditions, Korea Zinc’s board carefully deliberated and decided on October 30 to issue shares through a general public offering, within legal boundaries, to boost market liquidity, diversify shareholder ownership and move toward becoming a national company with greater participation from the public.

However, following the announcement, unforeseen shifts in market conditions raised concerns among institutional investors and minority shareholders. Regulators also requested amendments to the filing. Consequently, management and independent directors actively considered shareholder concerns and reassessed all options, including amending or withdrawing the filing. This careful review led to today’s resolution.

Acknowledging these unforeseen changes and the initial confusion, Korea Zinc accepts the feedback from shareholders and the market in good faith and extends a sincere apology for the disturbance.

Thank you.

Yun B. Choi

Chairman of Korea Zinc

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