"Claiming Illegal Tender Offer of Treasury Stocks
After Suppressing Stock Price, 20,000 Shares Bought on Market
This Constitutes Fraudulent and Unfair Trading"
Korea Zinc announced on the 21st that it has additionally submitted a petition to the Financial Supervisory Service requesting an investigation into whether Kim Kwang-il, Vice Chairman of MBK Partners, Jang Hyung-jin, Advisor of Youngpoong, Kang Sung-doo, President, and others from MBK and Youngpoong violated the Capital Markets Act.
MBK and Youngpoong applied for a second provisional injunction with the court to halt Korea Zinc's tender offer for its own shares, allegedly causing market instability, while at the hearing date, they purchased Korea Zinc shares at a low price, which is claimed to constitute fraudulent unfair trading.
Earlier, Korea Corporate Investment Holdings, a special purpose company (SPC) of MBK, disclosed that it had additionally purchased 1.36% (282,366 shares) of Korea Zinc shares on the market from the 18th of last month to the 11th of this month.
This period coincided with the time when MBK and Youngpoong filed the second provisional injunction following the first against Korea Zinc, pointing out legal issues in Korea Zinc’s tender offer process and emphasizing the high likelihood of the injunction being granted, thereby increasing market uncertainty. Nevertheless, Korea Zinc believes that MBK and Youngpoong engaged in fraudulent unfair trading by purchasing shares during this time.
It is reported that MBK and Youngpoong repeatedly conveyed to the market that the second provisional injunction was likely to be granted and that Korea Zinc’s tender offer could be halted. In fact, the investment banking (IB) industry evaluated that the risk associated with this was reflected in the limited rise of the stock price.
Korea Zinc’s position is that MBK’s actions were not merely expressions of opinion but were intended to provide information that would form specific market expectations among investors and influence the stock price. Ultimately, there is suspicion that MBK sought to hinder the stock price increase and profit by purchasing shares at a relatively low price using the resulting stock price level.
Choi Yoon-beom, Chairman of Korea Zinc, is speaking at a Korea Zinc press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. On the same day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible, and an outside director will take over as chairman of the Korea Zinc board." Photo by Kim Hyun-min
Additionally, Korea Zinc pointed out that if MBK and Youngpoong, while aware of the possibility of dismissal of the second provisional injunction, sent signals to the market indicating a high likelihood of its approval to artificially suppress price fluctuations, this would also constitute a violation of the Capital Markets Act.
With Korea Zinc’s additional petition to the Financial Supervisory Service this time, the number of petitions regarding MBK and Youngpoong’s market disruption and fraudulent unfair trading suspicions has increased to two.
Korea Zinc submitted a petition to the financial authorities requesting an investigation into possible price manipulation regarding the fact that on the last day of the tender offer conducted by MBK and Youngpoong (October 14), as the stock price continued to rise and the risk of the tender offer failing increased, large-scale sell-offs occurred multiple times, causing a 'sharp price drop in a short time.'
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