The company announced on Oct. 30 it will issue new shares worth 2.5 trillion won ($1.81 billion), apparently to fend off a takeover bid from its largest shareholder, Young Poong, and MBK Partners.
The Financial Supervisory Service (FSS) ordered Korea Zinc to correct its securities report submitted on the day regarding the public offering, effectively suspending the plan’s validity.
The FSS identified deficiencies in several areas, including the background and decision-making process behind the rights offering, the results of the underwriting firm's due diligence, the reasoning behind the subscription limit, and discrepancies with the tender offer registration statement.
If Korea Zinc does not submit the corrected report within three months, the rights offering will be considered withdrawn.
Korea Zinc had planned to issue 3,732,650 common shares, representing 20 percent of its total outstanding shares, through a public offering at 670,000 won per share.
The plan was announced came two days after Korea Zinc Chairman Choi Yun-beom and Bain Capital revealed they had acquired an 11.26 percent stake in the company through a tender offer.
The FSS has raised concerns about potential unfair trading, as Korea Zinc failed to properly disclose information regarding the share sale plan during the tender offer.
Korea Zinc was co-founded in 1974 by Chang Byung-hee and Choi Ki-ho. Today, the Choi family manages the company, while the Chang family oversees Young Poong and its electronics subsidiaries.
Since Choi Yun-beom became chairman in 2022, competition for Korea Zinc’s shares has intensified between the Choi and Chang families.
