[Alpha Biz= Reporter Kim Jisun] Korea Zinc’s rights offering has come under scrutiny from South Korea’s financial authorities. The Financial Supervisory Service (FSS) is investigating whether Korea Zinc, led by Chairman Choi Yoon-bum, intentionally omitted its plan for a rights offering priced at 670,000 won per share from disclosures while conducting a share buyback at 890,000 won per share. The FSS will also probe whether the securities firms involved were aware of these plans.

On the 31st, FSS Deputy Governor Ham Yong-il addressed the issue at an emergency briefing on capital markets, noting, “If the buyback and rights offering were sequentially planned but undisclosed in the tender offer statement, this could be considered unfair trading.”

The key focus of the FSS’s investigation is the timing of the rights offering plan. On the 29th, Korea Zinc’s board approved the issuance of 732,650 common shares at 670,000 won each through a general public offering, which amounts to nearly 20% of the company’s outstanding shares, valued at approximately 2.5 trillion won. 

 

Of this, 2.3 trillion won will be used to pay down debt acquired to finance the previous buyback, where Korea Zinc borrowed 2.3 trillion won from Meritz Securities, Korea Investment & Securities, KB Securities, and Hana Securities. Concerns over shareholder value led Korea Zinc’s stock to hit the lower limit in trading the previous day.

 

 

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