SEOUL (Reuters) - A South Korean court on Monday rejected a request by Young Poong to temporarily block Korea Zinc from proceeding with its tender offer to buy back shares in the company, pushing shares in the world's biggest zinc refiner to a record high.

After the court denied the injunction, Korea Zinc's biggest shareholder Young Poong said it would file a lawsuit, signalling a lengthy legal battle between founding families over control of the metals giant.

Young Poong has joined with private equity fund MBK Partners in an attempt to acquire a controlling stake in the refiner. That prompted Korea Zinc to partner with Bain Capital to propose to buy back shares in a $2.6 billion tender offer aimed at fending off the move.

Young Poong had argued to the court that Korea Zinc Chairman Yun B. Choi and two other executives violated fiduciary duties and breached trust through the plan to buy back treasury shares at prices above market value, in a move that would saddle the company with debt but bolster Choi's control.

The court ruling said the documents Young Poong had submitted so far did not show enough for it to determine Korea Zinc executives violated their fiduciary duty.

Korea Zinc's debt-to-equity ratio is expected to more than quadruple to 80%-100% after the tender offer, but the court said the ratio was not considered to be higher than many listed companies. The court also said it was hard to calculate the value of Korea Zinc shares, which have risen by more than 50% since MBK launched a tender offer in September.

The court said it could not conclude the buyback amounted to breach of trust because Korea Zinc pledged to cancel the treasury shares it acquires under the tender. The court also said there were no legal restrictions on repurchasing treasury shares to solidify management control in South Korea.

MBK said it was disappointed by the court decision and raised concerns it would have a negative impact not only on Korea Zinc's financial health, but the country's corporate governance and capital markets.

Korea Zinc shares closed up 6.4% at a record high of 877,000 won, close to the company's tender offer price of 890,000 won.

MBK said it would provide an update on its plan for an extraordinary shareholder meeting after Korea Zinc's tender offer expires on Wednesday.

MBK and Young Poong have secured a more than 5% stake in Korea Zinc through their tender offer of 830,000 won per share, paving the way for a battle for boardroom control at an upcoming shareholder meeting.

($1 = 1,367.7700 won)

(Reporting by Hyunjoo Jin; Additional reporting by Hyonhee Shin and Jihoon Lee; Editing by Ed Davies and Jamie Freed)

By Hyunjoo Jin