On June 17, industry sources reported that MBK and Youngpoong asserted that the Securities and Futures Commission's findings indicated Korea Zinc had excessively valued Ignio Holdings during its acquisition in 2022. They pointed out that Korea Zinc should have recognized an impairment loss of 163.6 billion won out of the 323.4 billion won goodwill related to Ignio Holdings when preparing its financial statements at the end of 2022, but failed to do so. They argued that the significant impairment loss in the first year after the acquisition supports suspicions of an inflated purchase price.
MBK and Youngpoong stated, "It is unusual for a large impairment loss to occur in the year a company is acquired," and called for an internal audit and independent investigation into the circumstances surrounding the acquisition. They also demanded explanations from the management team, including internal director Choi Yoon-beom, regarding the failure to timely reflect the related deficiencies in the financial records.
In response, Korea Zinc described MBK and Youngpoong's claims as one-sided and distorting the facts. They emphasized that the issue pertains solely to the timing and recognition of impairment losses related to a subsidiary, not the appropriateness of the Ignio acquisition or the use of corporate funds.
Korea Zinc stated, "Impairment loss assessments require high levels of estimation and judgment, and their impact on the current financial statements is limited," adding that the current enterprise value of the subsidiary exceeds its book value. They reiterated the strategic significance of the Ignio acquisition, stating it was an investment aimed at expanding the global resource recycling market, securing North American raw material networks, and establishing a value chain for eco-friendly copper production and battery materials. They maintained that the valuation was reasonably determined based on a report from a global investment bank during negotiations with the seller. Additionally, Youngpoong advisor Jang Hyung-jin noted that he supported the establishment of PedalPoint and the decision for a capital increase to facilitate the Ignio acquisition.
Korea Zinc also highlighted that its U.S. resource recycling subsidiary, PedalPoint, achieved its first annual profit last year and continues to show improvement this year, asserting that the benefits of the acquisition are becoming evident. They explained that, considering the rising prices of key minerals like copper and the global supply chain disruptions, Ignio's role in extracting intermediate materials from electronic waste will become increasingly important.
Korea Zinc announced plans to take strong legal action against what they described as damaging to their corporate value and containing numerous inaccuracies.
* This article has been translated by AI.
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