Market watchdog is investigating Korea Zinc’s share issuance plan

SEOUL: South Korea’s financial market watchdog said Thursday it recognized investor concerns over a recent decision by Korea Zinc to issue new shares and is investigating the plan to determine whether there are unfair practices.

The world’s largest zinc refiner on Wednesday announced a plan to issue new shares worth about $1.8 billion, a move seen by analysts as a strategy to counter an attempt by Young Poong and MBK to acquire the company. to counteract this, causing the shares to plummet.

The unexpected move came just two days after Korea Zinc bought back shares at a higher price and vowed to cancel them all to help boost shareholder value, amid an ongoing takeover battle.

“We will hold the company and its affiliated stock brokerage accountable if there is any unfair trading or misconduct,” Hahm Yong-il, senior deputy governor of the Financial Supervisory Service, said at a briefing.

He said the battle over the takeover of Korea Zinc has raised serious doubts about whether the boards of directors of listed companies make independent and reasonable decisions.

“We can never ignore this issue as it is related to the issue of increasing corporate value and improving corporate governance,” he said.

Run by the Choi family, Korea Zinc is locked in a bitter battle to gain control of the $18 billion zinc empire with the co-founding Chang family, whose conglomerate Young Poong made an initial joint bid with private equity firm MBK Partners in September.

The Korea Zinc saga “tests our commitment to reforming and improving capital markets and could largely go against market and investor expectations,” he added.

The regulator has already launched an investigation into tenders for Korea Zinc to monitor possible unfair trade practices, such as the spread of rumors.

He also said the regulator is investigating alleged accounting fraud at Korea Zinc and will soon decide whether to launch a formal investigation into the matter.