The market watchdog is investigating Korea Zinc’s share issuance plan

SEOUL :Korea’s financial market regulator is investigating whether Korea Zinc’s decision to issue new shares involves any unfair practices, it said on Thursday.

The world’s leading zinc refiner announced on Wednesday a plan to issue around $1.8 billion of shares in what analysts see as a strategy to prevent a takeover by Young Poong and MBK Partners, which has sent its shares tumbling.

Two days earlier, Korea Zinc bought back the shares at a higher price and committed to redeeming them to increase shareholder value.

The Financial Supervisory Service is investigating whether Korea Zinc bypassed its plan to deliberately issue new shares by offering to buy back shares through a tender offer.

The regulator said that Mirae Asset Securities, which was involved in both the share issue and the tender offer, is also under investigation, adding that the detection of any wrongdoing could result in an investigation.

“We will hold the company and its affiliated brokerage accountable if we detect unfair trading or misconduct,” Hahm Yong-il, senior deputy governor of the Financial Supervisory Service, said at a briefing.

“We cannot ignore this matter, as it is related to the issue of increasing the value of the company and improving corporate governance.”

Mirae Asset Securities declined to comment. A representative from Korea Zinc was not immediately available for comment.

Korea Zinc, run by the Choi family, is locked in a fierce battle for control of the $18 billion zinc empire with its co-founders Chang family. In September, Changs’ Young Poong conglomerate made its first joint offering with private equity firm MBK Partners.

The regulator also said it was investigating alleged accounting fraud at Korea Zinc and would decide soon whether to open a formal investigation.