Yun B. Choi, the chairman of Korea Zinc’s board, has pledged to step down and make way for an outsider to take the role. Credit: MacroEcon/Shutterstock.

Zinc refiner Korea Zinc has cancelled the proposed issuance of 3,732,650 new shares, amounting to nearly 20% of its total shares, worth $1.8bn (2.51trn won).

Yun B. Choi, the chairman of Korea Zinc’s board and a grandson of the company’s co-founder, has pledged to step down and allow an outsider to take the role.

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The decision comes amidst an intensifying takeover struggle involving founding family members and external investors Young Poong, a South Korean conglomerate, and private equity firm MBK Partners.

Korea Zinc had originally planned to issue the shares to fend off a takeover attempt by Young Poong and MBK Partners. The plan, however, sparked investor concerns and was met with regulatory scrutiny, forcing the company to withdraw the proposal.

The announcement is part of broader steps to improve shareholder value and address concerns about Korea Zinc’s corporate governance. This includes introducing quarterly dividends and adding protections for minority shareholders.

The MBK Partners and Young Poong consortium has continued to increase its stake in Korea Zinc. Their combined shareholding has risen to 39.83%, increasing their voting rights to 45.42%, giving them significant control in any shareholder decisions.

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Choi’s family and allied groups hold around a 35% stake in the company.

Following Choi’s announcement to step down, the company’s shares dipped by 14%, showing a partial recovery from an earlier 18% drop. However, shares had initially seen a 6% increase upon the announcement of the share issue cancellation.

The scrapped share issuance plan was first disclosed on 30 October, just two days after Korea Zinc repurchased its shares at a premium, proposing to issue new shares.