MBK, Young Poong secure key witness testimony in US over Korea Zinc's Igneo acquisition
Shareholders of Korea Zinc line up to enter the venue for the company’s extraordinary shareholders meeting at the Grand Hyatt Seoul, Jan. 23. Joint Press Corps
Private equity firm MBK Partners and Young Poong stepped up their pressure on Korea Zinc Chairman Choi Yun-beom by obtaining testimony from key executives based in the United States regarding the controversial high-priced acquisition of Igneo Holdings, the two companies said Friday.
The MBK-Young Poong alliance, the largest shareholder of the world's largest zinc smelter, is currently locked in a fierce battle with Choi over management control.
The alliance said that a district court in New York approved Young Poong's request on Wednesday (local time) for depositions from executives at Korea Zinc's U.S. subsidiary, PedalPoint Holdings.
The ruling allows the alliance to obtain testimony from key figures involved in the controversial deal, including PedalPoint CFO, surnamed Ham, and a senior manager, surnamed Ha.
MBK has claimed that Choi inflicted substantial financial harm on Korea Zinc by orchestrating the acquisition of Igneo, a financially insolvent waste management company based in the United States, at an inflated price of 580 billion won ($416 million) in 2022.
When launching a tender offer in September last year to become the largest shareholder of the zinc smelting firm and oust Choi, the MBK alliance argued that the deal not only resulted in major losses for the company but also provided the seller with a return nearly 100 times greater than the original investment.
The alliance had already obtained internal documents and a deposition from the head of PedalPoint under a July 2 ruling by the U.S. court.
"The latest court approval to secure further testimony from two additional executives brings us closer to shedding light on the disputed Igneo acquisition," an MBK official said.
The ruling followed Young Poong's application for judicial cooperation under U.S. federal law to obtain evidence for a shareholder derivative suit taking place in Korea.
In its decision, the court sided with Young Poong, stating that its request was justified, and further noted that PedalPoint's financial documents could support claims that Igneo was purchased at an excessive valuation, according to MBK.