By Heejin Kim and Heekyong Yang
SEOUL, Dec 16 (Reuters) – South Korean private equity firm MBK Partners and metal smelter YoungPoong Corp have filed for an injunction at a local court to block Korea Zinc’s share sale plan to fund the construction of a smelter in the U.S., MBK said in a statement on Tuesday.
Korea Zinc said on Monday it would build a $7.4 billion critical minerals refinery in Tennessee that will be funded largely by Washington.
Shares in Korea Zinc fell 13% at 0337 GMT following news of the planned injunction.
The statement said MBK and YoungPoong – both major shareholders of Korea Zinc – were not opposed to the plan to build the smelter, but objected to issuing new shares to designated investors to raise funds.
MBK said the move was intended to tighten Korea Zinc Chairman Yun B. Choi’s control over the company.
Korea Zinc also did not offer key information and sufficient time to board members to look into the investment plan ahead of Monday’s board meeting, the statement said.
A Korea Zinc spokesperson did not immediately respond to a request for a comment on the planed injunction.
The world’s largest zinc smelter has been embroiled in a bitter feud among founding families over control of the zinc empire.
YoungPoong and MBK have been attempting to wrest control from the current management led by Choi, amassing a combined 44% stake to become the largest shareholders, according to a November filing and LSEG data.
Korea Zinc’s deal with the U.S. government means the company has been chosen as a key partner in Washington’s push to build new supply chains for critical minerals and reduce reliance on China, analysts at Seoul-based Shinhan Securities Co. said in a note published on Tuesday.
The partnership with the U.S. government also gives a strong justification for the current management to maintain control, as they can argue the plan supports the U.S.-South Korea alliance and broader economic security, the note said.
(Reporting by Heejin Kim, Heekyong YangEditing by Ed Davies)
