Disclosure of Contact Counterpart Highly Unusual... Is It Really a Baekgisa?
Suspicions of Bluffing to Boost Stock Price Raised... Concerns Over Disclosure and Capital Market Act Violations
As reports flood in that Choi Yoon-beom, chairman of Korea Zinc, is in contact with Korean business circles and overseas funds, the investment banking (IB) industry is responding that it is somewhat unusual to disclose the parties involved in such contacts.
On the 23rd, MBK Partners pointed out, "Negotiations for large-scale investments such as tender offers are based on the unwritten rule that confidentiality is a prerequisite for meetings, and the disclosure of the meetings themselves can be burdensome." If the tender offer does not proceed, not only Chairman Choi but also the other parties could be involved in legal controversies such as illegal trading activities and market order disruption. In particular, in the case of Hanwha, which was reported to have met, depending on the verbal agreements made during this meeting regarding the shares already held, it could be recognized as a joint exercise of voting rights, raising the possibility of violating the 5% rule disclosure requirements.
This is a tremendous burden for the parties reported to have met as well. They are being portrayed as supporters of the tender offer and used as material influencing stock prices.
In the capital market, there is also an interpretation that Chairman Choi, lacking time to find a breakthrough, plans to manage the stock price at a level exceeding the public offering prices of Youngpoong and MBK to prevent the success of the tender offer and then seek future opportunities.
Earlier, MBK stated, "There are numerous baseless rumors being spread to stir up the possibility of a tender offer," warning that "this increases stock price volatility and encourages speculative buying, which will ultimately harm small shareholders when the stock price recovers after short selling." Such acts of spreading rumors may be punishable as market order disruption under Articles 178 or 178-2 of the Capital Markets Act.
If there is no tender offer, individual investors who have been driving the stock price by purchasing more than 800,000 shares over the past three trading days could suffer significant damage. Market experts commonly express concerns that the ripple effects could also impact Chairman Choi and the companies referred to as his so-called allies.
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