On March 12, Sun Metals Holdings (SMH), a wholly owned Australian subsidiary of Korea Zinc (KRX:010130), announced that it had received a 10.3% stake in Young Poong from Sun Metals Corporation (SMC) as dividends-in-kind.
The transaction has established a new cross-shareholding structure between Korea Zinc and Young Poong, meaning Young Poong’s voting rights will remain restricted at Korea Zinc’s upcoming annual general meeting later this month. As SMC’s parent company, SMH has also secured a foundation to prevent the hostile takeover attempt by MBK Partners and Young Poong from undermining corporate value and growth potential, thereby protecting the interests of all stakeholders.
SMH is a holding company overseeing zinc smelting and renewable energy operations in Australia. It is a wholly owned subsidiary of Korea Zinc and holds 100% of SMC’s shares.
Sun Metals Holdings (SMH) has received 190,226 shares of Young Poong as dividends-in-kind from Sun Metals Corporation (SMC). This represents 10.3% of Young Poong’s total outstanding shares (1,842,040 shares as of March 2025).
On January 22, SMC invested approximately KRW 57.5 billion to acquire 190,226 shares of Young Poong at KRW 302,274 per share. Subsequently, on March 11, SMC’s board of directors resolved to distribute these shares as dividends-in-kind, and on March 12, SMH lawfully acquired the 10.3% stake in Young Poong.
Notably, SMC’s dividends-in-kind to SMH was conducted in full compliance with Australian corporate law, following legal advice from an Australian law firm.
Meanwhile, Young Poong has announced plans to contribute its Korea Zinc shares as an in-kind contribution to its newly established subsidiary, YPC. However, since Korea Zinc’s upcoming annual general meeting (AGM) will be conducted based on the shareholder registry as of December 31, 2024, YPC—having acquired Korea Zinc shares after the record date* —will not be able to exercise shareholder rights at the AGM.
As a result, at Korea Zinc’s annual general meeting (AGM) later this month, Young Poong’s voting rights on 5,262,450 Korea Zinc shares (25.4% stake) will remain restricted. Under Article 369(3) of the Korean Commercial Act, if a subsidiary (SMH) holds more than one-tenth of another company’s total outstanding shares (Young Poong), then that company (Young Poong) loses voting rights on the shares it holds in its parent company (Korea Zinc). This restriction is further supported by the 2009 Supreme Court ruling, which confirms the limitations on voting rights in cases of cross-shareholding.
There had been some claims that SMC might not qualify as a "corporation" under Korean commercial law. However, there is no dispute that SMH is classified as a “Public Company Limited by Shares” under Australian corporate law. Even MBK Partners’ Vice Chairman, Kim Kwang-il, recently acknowledged on a YouTube podcast that SMH is indeed a corporation.
Amid growing concerns that Korea Zinc, SMH, and SMC could face a fate similar to Homeplus in the event of MBK’s takeover, SMC’s dividends-in-kind to SMH represents a rational and legitimate management decision. Beyond that, it is a lawful measure to safeguard corporate value and protect the interests of all stakeholders from Young Poong and MBK’s hostile takeover attempt.
* Record Date System: Article 354 of the Commercial Act in Korea designates a specific date to determine shareholders who are listed in the shareholder register on that date. These shareholders are confirmed as those entitled to exercise their rights as shareholders of the company. (Supreme Court of Korea 2009. 1. 30. 2006da31269 Judgement)
View source version on businesswire.com: https://www.businesswire.com/news/home/20250313227709/en/
Contacts
Korea Zinc
Jongwon Lee
+82-2-6947-2467
jwon@koreazinc.co.kr
