Seoul: Korea Zinc Co. announced on Wednesday its decision to issue new shares as part of a strategic maneuver to defend against a potential takeover by its largest shareholder coalition and a private equity firm. In a regulatory filing, the company disclosed plans to issue 3,732,650 shares, targeting a capital raise of 2.5 trillion won (approximately US$1.8 billion) at an estimated price of 670,000 won per share, with subscriptions open on December 3-4.
According to Yonhap News Agency, Korea Zinc intends to allocate 20 percent of the new shares for employee subscriptions on December 3. The company stated that the final pricing of the shares will be determined shortly before the subscription period commences. In its statement, Korea Zinc emphasized that the rights issue aims to stabilize the stock price amidst the escalating control struggle with Young Poong Corp. and MBK Partners.
The company further highlighted that the share issuance is a proactive measure to prevent Korea Zinc from being flagged as an is
sue of concern by the Korea Exchange, which could potentially lead to an involuntary delisting from the main stock exchange. Observers, however, interpret the move as Korea Zinc’s strategy to acquire more treasury stocks with voting rights to strengthen its position in the ongoing conflict with the Young Poong faction.
Currently, the Young Poong camp holds a 38.47 percent stake in Korea Zinc following a recent tender offer, while Chairman Choi Yun-beom and related parties maintain a 35.4 percent stake after a buyback. The announcement of the share issuance has significantly impacted Korea Zinc’s stock value, causing it to plummet by the daily limit of 30 percent to 1,081,000 won, notably underperforming compared to the Korea Composite Stock Price Index’s decline of 1.1 percent.