Korea Zinc Designated as Unfaithful Disclosure Corporation Due to Rights Offering Reversal... "Penalty of 65 Million Won"

The Korea Exchange designated Korea Zinc, which withdrew its decision on a paid-in capital increase, as a non-compliant disclosure corporation and imposed 7.5 penalty points and a fine of 65 million KRW.

On the 11th, the Korea Exchange announced that it would sanction Korea Zinc for late disclosure of corrected facts during the management rights dispute lawsuit with the Youngpoong-MBK alliance (failure to disclose) and for reversing the decision on the paid-in capital increase (disclosure reversal).

This is a follow-up measure to the Korea Exchange's announcement last month on the 22nd, when it had preliminarily designated Korea Zinc as a non-compliant disclosure corporation.

The penalty points imposed for failure to disclose are 1 point, and 6.5 points for the disclosure reversal related to the paid-in capital increase. The fine for disclosure violations was imposed only for the disclosure violation case, amounting to 65 million KRW.

Earlier, on October 30 of this year, Korea Zinc announced that it would newly issue 3,732,650 common shares, nearly 20% of the total issued shares, at 670,000 KRW per share through a public offering. The market criticized this move, saying that the company borrows money and then makes shareholders repay the debt to gain a majority stake.

Additionally, suspicions arose that Korea Zinc planned the paid-in capital increase before completing its open market repurchase of treasury shares but did not disclose this, prompting financial authorities to launch an investigation. On the 6th of last month, the Financial Supervisory Service also requested a correction of the securities registration statement.

In response to the financial authorities' investigation and market criticism, Korea Zinc abruptly withdrew the decision on the paid-in capital increase on the 13th of last month.