"Expanding Shareholder Base Through Public Offering to Quality Companies"
Increasing Circulating Shares... Preventing Delisting
Yeongpung and MBK Stake Dilution 'Strategic Move'
Korea Zinc announced on the 30th that it will open up its governance and management structure through a rights offering to leap forward as a "national company." Amid the situation where Youngpoong and MBK Partners have become the largest shareholders through a public tender offer, there is an analysis that the company aimed to dilute the shareholding ratio through the rights offering.
On the 30th, Korea Zinc held an extraordinary board meeting to report the results of the tender offer for treasury shares, the requests for convening an extraordinary general meeting by Youngpoong and MBK, and resolved the agenda item of a general public offering rights issue.
Korea Zinc explained, "To play a pivotal role in the national key industries and to further focus on fostering South Korea's national strategic industries, we are promoting a leap to become a 'national company' through a general public rights offering targeting the entire nation." It added, "We will provide opportunities for small shareholders, institutional investors, and the general public to participate as shareholders, thereby strengthening corporate management transparency through ownership dispersion."
Furthermore, it elaborated, "Through the general public offering, we intend to overcome the situation where shares are concentrated in specific shareholders after the tender offer, which could continuously cause disputes. This also reflects our determination to ensure that the supply and quality maintenance of core industrial materials such as zinc, lead, gold, silver, copper, semiconductor sulfuric acid, and rare metals like indium and cobalt, as well as strategic mineral resources such as bismuth and antimony, are not disrupted."
Korea Zinc will conduct the general public rights offering starting with a subscription announcement. The total number of shares to be raised is 3,732,650 shares, which corresponds to 20% of the issued shares excluding the treasury shares acquired for cancellation through the tender offer.
The funds raised will be invested in fostering national strategic industries such as secondary batteries, and some will be used for debt repayment. Additionally, 80% of the shares to be raised will be offered through the general public offering, and the remaining 20% will be allocated to the employee stock ownership association in accordance with the law.
In particular, excluding the employee stock ownership association, all subscribers and their special related parties will be allocated shares within 3% of the total shares to be raised, which amounts to 111,979 shares.
Korea Zinc explained, "This is part of our efforts to expand the shareholder base and promote national corporatization."
The issue price will be set based on the weighted arithmetic average price (the price obtained by dividing the total transaction amount by the total transaction volume) of the stock price from 3 to 5 trading days before the subscription date, and a 30% discount will be applied within the limits of the issuance disclosure regulations.
Korea Zinc expects to generate various positive effects through this general public rights offering.
First, ▲establishing itself as a 'national stock' through ownership dispersion and shareholder base expansion, ▲resolving delisting risk caused by reduced trading volume and alleviating stock price volatility through increased liquidity and shareholder protection, ▲reducing the risk of exclusion from the MSCI Korea Index, ▲strengthening the foundation for sustainable growth and stabilizing financial structure through fundraising, and ▲improving employee welfare and labor-management cooperation through employee stock allocation.
Recently, due to the tender offers by Youngpoong and MBK and Korea Zinc's purchase of treasury shares, the circulating shares have significantly decreased, causing the stock price to surge more than 100% within 18 trading days and reach 1,543,000 KRW as of the closing price on the 29th, resulting in excessive volatility. This has raised concerns about investor damage due to delisting or designation as a management stock.
Korea Zinc plans to actively invest in fostering national strategic industries such as secondary batteries and use some of the funds for debt repayment.
A Korea Zinc official said, "Through a general public rights offering targeting the public, we plan to prevent hostile mergers and acquisitions (M&A) and the resulting technology leakage, as well as the overseas sale of national key industries, thereby enhancing corporate value in the long term and protecting the interests of all stakeholders including employees, partner companies, and local communities, ultimately becoming a true 'national company.'"
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