Korea Zinc Proposes Beginning a Dialogue for a Grand Compromise at the Post-EGM Press Conference

Following the recent extraordinary general meeting (EGM), Korea Zinc (KRX:010130) held a press conference today where CEO Park Ki-deok proposed beginning a dialogue for a grand compromise with MBK Partners in order to heal and move forward.

During his statement, CEO Park said that it is now time to move on from the past and for Korea Zinc and MBK to engage in sincere dialogue and negotiations in pursuit of shared goals. He stated, “We at Korea Zinc are prepared to embark on that path. If this grand compromise is accepted, we believe that Korea Zinc, together with MBK, can work toward a brighter future for the company.”

Vice Chairman and CTO Lee Je-joong and Lee Bong-chul, head of Korea Zinc’s labor union, were also present at the press conference on behalf of the technical team and labor union.

The press conference followed the EGM held on January 23 where many shareholder-friendly measures, especially those benefiting minority shareholders, were approved, including the introduction of cumulative voting system, limiting the maximum board size, appointment of an independent director as the board chair, adopting quarterly dividends and stock split.

Please see below for the full press conference statement.

[Press Conference Statement by Korea Zinc CEO Park Ki-deok]

“We Propose the Beginning of a Dialogue for a Great Compromise”

I am Park Ki-deok, CEO of Korea Zinc.

First, I would like to express my heartfelt gratitude to our shareholders for their support, to our employees at Korea Zinc, our partner companies, Ulsan and other local communities and the people of Korea who have stood by us. I also extend my thanks to the reporters who stayed ‘till late hours to cover yesterday’s extraordinary general meeting (EGM) and joined us here today.

Korea Zinc has been fully committed to protecting the company—a key national industry corporation—from a hostile takeover attempt that has persisted for more than four months.

Sun Metals Corporation (SMC), as an overseas subsidiary of Korea Zinc, is equally dedicated to safeguarding itself and all of us from the threat of a hostile takeover. SMC is also committed to upholding given responsibilities, status and the blueprint of Korea Zinc, who holds a significant place in global supply chains, as its important subsidiary.

The results of yesterday’s EGM reflect the collective efforts and hopes of many. It is our responsibility to preserve this key national industry, prevent the leakage of critical Korean technologies and protect the jobs and workplaces of our employees. This responsibility is one we, as the management, take very seriously.

However, I am here today to emphasize that yesterday’s EGM was not the end, but rather marked the beginning.

The hostile takeover attempt, which began with a surprise public tender offer launched on September 13, has caused significant anxiety and pain not only to Korea Zinc’s employees but also to their families, our partner companies and our customers. It has disrupted the very essence of daily life.

Korea Zinc does not belong to any single individual.

As I have repeatedly stressed, Korea Zinc is a national key industry and a valuable asset of Korea that all shareholders must work together to ensure that the company plays a significant role without wavering driving Korea's future strategic industry, including secondary battery materials.

It's now time to put an end to the consuming conflicts filled with made-up claims and slanders.

While we cannot return to the state of affairs before September 13, and while the wounds inflicted on our employees will require more time to heal, we must move on from the past and seek a rational solution for the company we all love—Korea Zinc—and for the shared dream it represents.

To safeguard this national core industry and take us back to the period when we can pay full attention to contributing to the company’s growth, we deliberated extensively on how to conduct yesterday’s EGM.

And we concluded that we must make every effort for the parties involved in this conflict and dispute to communicate and engage with one another. For this to happen, protecting the company must take precedence, as echoed by all Korea Zinc employees, technical team and labor unions here today. MBK Partners and Young Poong have been portraying our defensive measures as actions that solely benefit the chief executive Yun B. Choi. However, I want to make it clear that such accusations are part of a hostile takeover strategy that disregards and insults the Korea Zinc employees, technical team and labor unions that are here today.

We all love Korea Zinc. Despite the deep scars and emotional wounds caused by this prolonged 130-day battle, our love for the company outweighs any pain or frustration. Korea Zinc is an outstanding company with immense value, making significant contributions to Korea’s economy. We are proud to call this “our” company.

As stated before, Korea Zinc would like to propose a fresh new beginning.

Because our love for Korea Zinc is greater than our wounds, we can find it in our hearts to consider accepting MBK Partners, no longer as an adversary, but as a new partner. Of course, this would only be possible if a genuine belief emerges among us that MBK and Korea Zinc can indeed engage in sincere dialogue and negotiations in pursuit of shared goals. We at Korea Zinc are prepared to embark on that path. If this grand compromise is accepted, we believe that Korea Zinc, together with MBK, can work toward a brighter future for the company.

We believe that MBK, as a reputable private equity fund befitting its distinguished reputation, can build mutual trust with Korea Zinc through communication and dialogue, playing a positive role as a partner to the company in line with the constructive functions of a private equity. We implore MBK to regain their composure and carefully consider our gesture with sincerity and thoughtfulness.

Korea Zinc would like to present several tangible proposals to MBK, premised on achieving this grand compromise. Throughout these recent events, both domestic and international proxy advisory firms, including ISS, Glass Lewis, ESG Research Institute and Sustinvest, as well as institutional investors such as the National Pension Service of Korea, have emphasized the benefits of enhancing the independence, oversight functions and diversity of the board. In line with these recommendations, we would like to express our willingness to operate Korea Zinc's board more openly, and to proactively engage with MBK through mutual communication, thereby making the board more accessible to their voice.

Even ISS, a global proxy advisory firm which has been frequently cited by MBK, has expressed the opinion that capping Korea Zinc’s maximum board size at 19 is appropriate. Along with this, they have recommended appointing some board members nominated by MBK to work together to improve governance.

The current management of Korea Zinc sincerely respects and is committed to considering the opinions of shareholders and various stakeholders who care deeply for the company. If MBK and the current management can establish a shared goal, which is namely the advancement of Korea Zinc, through mutual trust and collaboration, we believe this can contribute to enhancing the diversity of the board's composition. Furthermore, if MBK wishes, we are open to offering opportunities for participation in management. We believe that the expertise and wisdom MBK has accumulated as Northeast Asia's largest private equity firm will greatly benefit Korea Zinc.

Moreover, Korea Zinc’s chief executive Yun B. Choi has pledged to step down as the Chairman of the board, and we reiterate that this promise will be fulfilled at the next board meeting.

The introduction of cumulative voting system, limiting the maximum board size, appointment of an independent director as the board chair, adopting quarterly dividends and stock split, which were all approved at the recent EGM, were genuine shareholder-friendly policies designed to benefit minority shareholders, as well as our wider array of stakeholders from global and domestic proxy advisory firms and pension funds. These measures also reflect our resolve to relinquish a portion of our own vested interests. Korea Zinc will not stop here. For the future of the company, we will continue to listen to our shareholders, adapt and make improvements.

Once again, we urge MBK to seriously consider and review our proposal. We also want to emphasize that we are always open to creating a platform for deeper discussions and communication. However, if MBK rejects our sincere proposal and insists on continuing a hostile and exhausting conflict where one side must perish and the other suffers significant wounds, causing Korea Zinc, a key national industry, to be scarred, its employees harmed, and even the local community to be hurt, then all of us here today, representing Korea Zinc’s executives, employees, technical team and labor union, declare that we will not shy away from that war.

MBK must also clearly recognize that the path forward alongside Korea Zinc will be fraught with immense challenges without the cooperation of all these stakeholders. We hope they deeply reflect on what the path of coexistence entails and what the mire of mutual destruction would bring.

Furthermore, I would like to emphasize once again that the EGM held yesterday, as well as the preparations leading up to it, was an intense effort to achieve an ideal outcome that reflected the wishes of all members of Korea Zinc. This wish is to build Korea Zinc as a national enterprise, and process was aimed at bringing about a new beginning for the company.

Korea Zinc pledges to continue to strengthen its global leadership based on world-class technology and ESG management. We will not spare any effort to repay the support of our shareholders, investors, partners, local communities and the people of Korea by contributing to the development of national industries.

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