"Blocking Delisting and MSCI Exclusion Risks Due to Declining Trading Volume"
"Mirae Asset Securities Incorrectly Reported Debt Financing Plan Review"
Korea Zinc announced on the 1st that the timing of considering a public offering rights issue was "after the conclusion of the tender offer for treasury shares on the 23rd." Previously, financial authorities viewed that Korea Zinc might have violated the Capital Markets Act by not disclosing the rights issue plan in the tender offer filing.
In a statement released that day, Korea Zinc explained, "Regarding the tender offer for treasury shares, there were many market expectations that the stock price would normalize to the pre-tender offer level after the tender offer ended. Since the purchase volumes on the 22nd and 23rd could not respond to the tender offer, it was expected that the stock price would normalize from the 22nd."
It continued, "However, from the 22nd, trading volume sharply declined, intensifying market instability due to a shortage of floating shares, and the possibility of delisting increased due to the reduced trading volume. As the risk of MSCI index exclusion also rose, the side effects became very significant, prompting urgent action on this matter," it stated.
Mirae Asset Securities IB1 team, the lead manager of Korea Zinc's public offering rights issue, reportedly conducted due diligence on Korea Zinc from the 14th to the 29th.
In response, Korea Zinc explained, "The due diligence report stating the period from the 14th was mistakenly recorded. It was related to reviewing debt financing methods such as corporate bonds and CP with securities firms for low-interest debt financing during the tender offer period for treasury shares."
It added, "Since the results of the debt financing due diligence, including corporate bond issuance, could be almost identically utilized for the rights issue due diligence, the securities firm retrospectively applied the existing due diligence results to the rights issue, causing the filing to mistakenly indicate that the rights issue due diligence started from the 14th."
Korea Zinc expressed, "We apologize for causing unnecessary misunderstandings among investors and will accurately and sincerely explain the facts to the authorities and the market to actively resolve the controversy."
It further emphasized, "The public offering rights issue is being pursued to increase the circulating shares of Korea Zinc in the market and to secure a healthy and diverse shareholder base. It is part of efforts to resolve various uncertainties in the stock market and increasing risk factors as a listed company amid hostile M&A (mergers and acquisitions) processes."
On the 30th of last month, Korea Zinc's board of directors resolved to proceed with a rights issue of approximately KRW 2.5 trillion through a public offering of 3,732,650 shares. In response, Ham Yong-il, Deputy Director of the Capital Markets and Accounting Division at the Financial Supervisory Service, held a briefing at the FSS headquarters on the 31st regarding the issue, stating, "We will promptly review and address any legal violations related to the simultaneous progress of the tender offer and rights issue."
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