Korea Zinc Chairman Choi Yun-beom speaks during a press conference at the Korea Chamber of Commerce and Industry in central Seoul, Nov. 13. Yonhap
Companies classified as allies of Korea Zinc Chairman Choi Yun-beom have recently been selling their stakes in the world's largest zinc smelter one after another. The selling spree comes as Choi has been locked in a fierce battle with the MBK Partners-Young Poong alliance for managerial control.
Trafigura, a Singapore-based commodities company considered one of Choi's allies, reportedly sold off part of its stake in Korea Zinc through the zinc smelter's tender offer in October, becoming the latest in a series of Choi's friendly shares being withdrawn.
Before the tender offer, Trafigura's stake in Korea Zinc stood at 1.49 percent or 307,678 shares. Following the tender offer, this was reduced to approximately 230,000 shares, lowering its stake to around 1.1 percent, according to sources in the securities industry.
Regarding this, Korea Zinc explained that the change in Trafigura's stake was merely due to shares being lent rather than an actual reduction in ownership.
In the market, Trafigura is generally classified as a friendly shareholder aligned with Choi, as the multinational firm has maintained a long-standing business relationship with Korea Zinc, particularly in areas such as raw material procurement. In 2022, Trafigura participated as a strategic investor by purchasing 200 billion won ($139 million) worth of the zinc smelter's treasury shares.
Other entities known as "white knights" for Choi, including Korea Investment & Securities and Hankook Tire & Technology, have already sold all of their Korea Zinc shares. The two firms held 0.8 percent and 0.7 percent stakes in the zinc smelter, respectively.
Additionally, Hankook & Company Honorary Chairman Cho Yang-rae as well as BlueRun Ventures General Partner Yoon Kwan and his spouse, Koo Yeon-kyung, the head of the LG Welfare Foundation, have divested of all their Korea Zinc shares.
As a result, it is estimated that even when combining all friendly shares, Choi currently holds only about 34 percent of the Korea Zinc shares, whereas the MBK-Young Poong alliance is believed to control close to 40 percent.
Kim Kwang-il, a partner at MBK Partners, speaks during a press conference at Lotte Hotel Seoul, Dec. 10. Courtesy of MBK Partners
The two sides are expected to face off in a vote at the zinc smelter's extraordinary shareholders' meeting, scheduled for Jan. 23, over key agenda items, including the replacement of board members, which will decide the future control of the company's management.
The National Pension Service (NPS), which is known to hold the casting vote, owned 7.48 percent of Korea Zinc shares as of September.
However, according to the asset management industry, it is believed that NPS may have sold a significant portion of its holdings through entrusted asset managers following MBK's tender offer and Korea Zinc's treasury stock tender offer in September and October.
During the management rights dispute between HYBE and Kakao over SM Entertainment last year, NPS also sold about half of its holdings. Most of the shares sold by NPS were reportedly held by its entrusted asset managers.