SEOUL (Reuters) – South Korea’s financial regulator has asked prosecutors to conduct an investigation into Korea Zinc over allegations that its now scrapped plan to issue new shares involved unfair practices, Korea Economic Daily said on Tuesday.
In November, the chairman of Korea Zinc’s board Yun B. Choi dropped a plan to issue new shares worth $1.8 billion that had sparked an investigation by the financial watchdog and a share sell-off.
The world’s top zinc refiner had announced the share plan in October in a move perceived by analysts as a strategy to fend off a takeover by Young Poong and MBK Partners, just two days after Korea Zinc bought back shares at a higher price.
The Financial Supervisory Service said in October it was investigating whether Korea Zinc had omitted its plan to issue new shares intentionally when it offered to buy back shares via a tender offer.
The FSS referred the matter to prosecutors, alleging that Korea Zinc’s management and board had violated capital market law, according to the report.
A spokesperson at the FSS declined to comment on the story or to elaborate, as the probe is still underway. A Korea Zinc spokesperson had no immediate comment.
Korea Zinc plans to hold a special shareholders’ meeting on Jan. 23 to discuss the appointment of directors proposed by Young Poong and private equity firm MBK Partners amid an escalating fight for control of the company.
(Reporting by Hyunjoo Jin; Additional reporting by Cynthia Kim; Editing by Jan Harvey)
