According to industry sources on June 17, MBK and Youngpoong argue that the Securities and Futures Commission's findings indicate that Korea Zinc overvalued Ignio Holdings during its acquisition process in 2022. They assert 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 claim that the significant impairment occurring in the first year after the acquisition supports suspicions of excessive pricing.
MBK and Youngpoong stated, "It is unusual for a large impairment of goodwill to occur in the year of acquisition. An internal audit and independent investigation are necessary to clarify the circumstances surrounding Korea Zinc's high-priced acquisition of Ignio Holdings." They also called for explanations regarding why the management, including internal director Choi Yoon-beom, did not reflect the related deficiencies in the books in a timely manner.
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 recognition and timing of impairment losses related to a subsidiary, not the appropriateness of the Ignio acquisition or the use of corporate funds.
Korea Zinc explained, "Impairment loss assessments require high levels of estimation and judgment, and their impact on current financial statements is limited. The current enterprise value of the subsidiary that acquired the company exceeds its book value."
Korea Zinc also reiterated the strategic significance of the Ignio acquisition, stating that it was an investment aimed at expanding the global resource recycling market, securing a North American raw material network, and building a value chain for eco-friendly copper production and battery materials. They noted that they reasonably assessed the company's value based on a global investment bank's valuation report during negotiations with the seller. Additionally, Youngpoong advisor Jang Hyung-jin pointed out that he supported the establishment of PedalPoint and the decision for a capital increase for the Ignio acquisition.
Korea Zinc further claimed that its U.S. resource recycling subsidiary, PedalPoint, achieved its first annual profit last year and continues to show improvement this year, indicating the acquisition's positive impact. They argued that with rising prices of key minerals like copper and the ongoing global supply chain disruptions, Ignio's role in extracting intermediate materials from electronic waste will become increasingly significant.
Korea Zinc announced plans to take strong legal action, stating, "We will pursue legal measures due to the inclusion of numerous inaccuracies that damage the company's value."
* This article has been translated by AI.
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