SEOUL :South Korea’s financial market watchdog is investigating whether Korea Zinc’s decision to issue new shares involves any unfair practices, it said on Thursday.
The world’s top zinc refiner on Wednesday announced a plan to issue shares worth about $1.8 billion in a move perceived by analysts as strategy to fend off a takeover by Young Poong and MBK Partners, sending its stocks plunging.
Two days earlier Korea Zinc bought back shares at a higher price and pledged to cancel all of them to enhance shareholder value.
The Financial Supervisory Service it is investigating whether Korea Zinc omitted its plan to issue new shares intentionally when it offered to buy back shares via a tender offer.
The regulator said Mirae Asset Securities, which was involved both in the share issue and tender offer, is also being investigated, adding that discovery of any wrongdoing could result in a criminal investigation.
“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.
“We can never disregard the matter, since it is connected with the issue of boosting corporate value and improving corporate governance.”
Mirae Asset Securities declined to comment. A Korea Zinc representative was not immediately available to comment.
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. The Changs’ Young Poong conglomerate made an initial joint offer with private equity firm MBK Partners in September.
The regulator also said it was looking into alleged accounting fraud at Korea Zinc and would decide soon whether to launch a formal investigation.
