December 22, 2024

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MBK Partners Vice Chairman Kim Kwang-il speaks at a press conference held at a hotel in central Seoul, Tuesday. (Newsis)

Private equity firm MBK Partners suggested a stock split for Korea Zinc as part of its initiatives to enhance the shareholder value of the troubled zinc smelter, which has been embroiled in a heated power struggle.

While the MBK-Young Poong coalition and the current management of Korea Zinc, headed by Chairman Choi Yun-beom, continue a prolonged quarrel over the right to control the zinc smelter, the private equity house unveiled a set of initiatives to boost its shareholder value, including a stock split. A 10-for-1 split is being considered.

"The current share price of Korea Zinc is overwhelming for retail investors. It should be brought down," MBK Partners Vice Chairman Kim Kwang-il said at a press conference held at a hotel in central Seoul, Tuesday.

A stock split increases the number of shares in circulation and leads to an inflow of new investors, improving the price earnings ratio, Kim said.

The shares of Korea Zinc were traded at 1.53 million won ($1,071) as of 2:30 p.m. Tuesday. On Sept. 12, a day before the power struggle surfaced after MBK launched a tender offer on the company, the share price stood at 522,000 won. Amid the takeover quarrel, share prices have fluctuated heavily, even reaching a high of 2.4 million won on Friday.

"Excluding MBK-Young Poong, the second major shareholders of Korea Zinc (Choi and his alliance) and strategic investors, only around 15 percent of the total shares are left on the market," Kim said.

The amount of Korea Zinc's circulating shares contracted following separate tender offers from the rivaling parties. In October, the current management of Korea Zinc suggested a 2.5 trillion won capital raise, citing the need to bring up the circulation amount, but eventually withdrew the plan due to heavy criticism.

MBK further suggested it would cancel all the treasury shares held by Korea Zinc, which total 12.27 percent, and regularly announce its policy for dividend payouts, when it makes way in the management board. Chairman Choi has also pledged to cancel the treasury shares but has not yet specified a date.

Korea Zinc is set to hold an extraordinary shareholders' meeting on Jan. 23. It would be the first official meeting of Korea Zinc shareholders held since the power struggle between MBK-Young Poong and Choi intensified.

MBK-Young Poong holds a 39.83 percent stake in Korea Zinc, while Choi and his alliances are thought to have control around a 35 percent shareholding in the company.

By Im Eun-byel (silverstar@heraldcorp.com)