[Alpha Biz= Kim Jisun] Seoul, July 1 — Taekwang Industrial’s plan to raise capital through exchangeable bonds (EBs) backed by treasury shares has been halted by Korea’s financial regulator, raising concerns over the company’s broader investment roadmap involving new business ventures.
The company announced it would invest a total of KRW 1.5 trillion by the end of next year in acquisitions and the establishment of new businesses in sectors including cosmetics, energy, and real estate development — with around KRW 1 trillion slated for deployment this year alone.
On June 30, the company’s board approved an EB issuance worth KRW 318.6 billion, secured by its entire treasury stock holding (24.41%). However, the Financial Supervisory Service (FSS) issued a correction order on July 1, citing the company’s failure to disclose the bond’s counterparty — a requirement under Korea’s capital market regulations.
Industry observers note that such EB issuances function similarly to third-party allotments of new shares and can significantly impact the interests of existing shareholders. Truston Asset Management, the company’s second-largest shareholder, filed an injunction with the Seoul Central District Court on June 30, seeking to halt the board’s resolution on grounds of shareholder rights violations.
According to Korea’s Capital Markets Act, listed firms must clearly identify counterparties in any disposition of treasury shares via board resolution. Omission of such information could create legal vulnerabilities during the execution stage.
The regulatory setback has cast uncertainty over Taekwang Industrial’s aggressive diversification plans, which were aimed at enhancing long-term profitability and business resilience.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
