Korea Zinc chair extends loan used in KZ Precision tender battle

Choi Yoon-beom, chairman of Korea Zinc. /News1

Choi Yoon-beom, chairman of Korea Zinc, has extended the maturity of a 130 billion won (approximately $91 million) loan from Hana Securities that was used to fund a tender offer for KZ Precision, formerly known as Young Poong Precision, amid an ongoing battle for control of the company.

According to investment banking sources on Apr. 11, Jericho Partners, a special-purpose company (SPC) established and funded by Choi’s family, recently reached an agreement with Hana Securities to postpone the loan’s repayment. While the exact terms of the extension have not been disclosed, sources familiar with the matter estimate the maturity has been pushed back by at least six months.

Jericho Partners secured the 130 billion won loan from Hana Securities in October 2023. The facility carried a minimum fixed interest rate of 5.7%, with the drawdown date recorded as Oct. 18. The original maturity was set for six months from the initial disbursement, with repayment scheduled for this month.

The tender offer for KZ Precision was part of Choi’s broader effort to solidify control in the ongoing Korea Zinc ownership dispute. As Young Poong Group and MBK Partners sought to acquire control of KZ Precision to increase their influence over Korea Zinc, Choi launched a counter-tender to block their attempt. Although KZ Precision holds only a 1.85% stake in Korea Zinc, securing its management rights could effectively deliver voting power equivalent to 3.7% of Korea Zinc shares.

Hana Securities acted as the tender agent for Choi’s side throughout the process.

Jericho initially borrowed 100 billion won ($70 million) from Hana Securities, but as the bidding war escalated, Choi’s group raised its offer price from 30,000 won to 35,000 won per share and increased its purchase target from 25% to 35% of KZ Precision’s outstanding shares. The loan amount was subsequently raised to 130 billion won to support the expanded offer.

In addition to the loan from Hana Securities, Choi’s family also secured a 20 billion won ($14 million) loan from TKG Taekwang. That loan, however, has a more lenient repayment schedule, with maturity set for October this year.

Choi ultimately succeeded in the tender, with 34.9% of KZ Precision shares tendered. As of the end of 2023, his side held a 70.28% stake in the company.

[Noh Ja-woon]

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