According to industry sources on June 17, MBK and Youngpoong asserted that the sanctions from the Securities and Futures Commission indicated that 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 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 high acquisition price. They also demanded explanations regarding why the management, including internal director Choi Yoon-beom, did not timely reflect the related deficiencies in the financial records.
In response, Korea Zinc characterized MBK and Youngpoong's claims as one-sided and distorting the facts. They emphasized that the issue pertains solely to the timing and accounting judgments related to the recognition of impairment losses for 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 current financial statements is limited," adding that the current enterprise value of the subsidiary acquired exceeds its book value.
Korea Zinc reiterated the strategic significance of the Ignio acquisition, stating it was an investment aimed at expanding the global resource recycling market, securing a North American supply chain, and building a value chain for eco-friendly copper production and battery materials. They claimed 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 Pedal Point and the decision for a capital increase for the Ignio acquisition.
Korea Zinc also highlighted that its U.S. resource recycling subsidiary, Pedal Point, achieved its first annual profit last year and is continuing to improve its performance this year, asserting that the benefits of the acquisition are becoming evident. They explained that with rising prices for key minerals like copper and the global trend of supply chain blockades, Ignio's role in extracting intermediate materials from electronic waste will become increasingly important.
Korea Zinc concluded by stating, "We plan to take strong legal action as the claims damage our corporate value and contain numerous inaccuracies."
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.