Market watchdog looking into Korea Zinc's share issuance plan
· CNA · JoinSEOUL :South Korea's financial market watchdog said on Thursday it acknowledged concerns among investors over a recent decision by Korea Zinc to issue new shares and was looking into the plan to determine if it involved any unfair practices.
The world's top zinc refiner on Wednesday announced a plan to issue new stock worth about $1.8 billion, a move perceived by analysts as a strategy to counteract an attempt by Young Poong and MBK to take over the company, sending its stocks plunging.
The unexpected move came just two days after Korea Zinc bought back shares at a higher price and pledged to cancel all of them to help enhance shareholder value, amidst an ongoing takeover battle.
"We will hold the company and related securities brokerage accountable if any unfair trade or misconduct is found," Hahm Yong-il, senior deputy governor of the Financial Supervisory Service, told a briefing.
He said the Korea Zinc takeover battle has raised serious doubts about whether board of directors at listed companies make independent and reasonable decisions.
"We can never disregard the matter, since it is connected with the issue of boosting corporate value and improving corporate governance," he said.
Run by the Choi family, Korea Zinc has been in a bitter fight to control the $18 billion zinc empire with the co-founding Chang family, whose conglomerate Young Poong made an initial joint offer with private equity firm MBK Partners in September.
The Korea Zinc saga "tests our commitment to reforming and improving the capital markets and could largely go against the expectations of the market and investors," he added.
The regulator has already launched an investigation into tender offers for Korea Zinc to monitor for any unfair trade practices, such as the spreading of rumours.
He also said the regulator was looking into alleged accounting fraud at Korea Zinc and would decide whether to launch a formal investigation into the matter soon.
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