Taekwang Industrial Files Complaint with Financial Authorities over Truston's High-Priced Tender Offer Pressure

Allegations of Greenmail and Preemptive Share Disposal Raised
Claims of Market Order Disruption

Taekwang Industrial announced on July 28 that it had submitted a petition to the Financial Supervisory Service regarding Truston Asset Management's pressure for a high-priced public tender offer and its massive sale of shares prior to the block deal disclosure.

According to Taekwang Industrial, Truston demanded through shareholder letters in February and March that Taekwang Industrial sell its major assets and then buy back and cancel approximately KRW 18 billion worth of treasury shares at KRW 2 million per share. At that time, the share price was around KRW 621,000, meaning the requested public tender offer price was about 3.2 times the market price.

The company argued that such a proposal could induce a temporary surge and crash in the share price, disrupt market order, and amount to pressuring directors to engage in artificial stock price manipulation. The company's legal counsel also reviewed the matter and concluded that the high-priced public tender offer could potentially violate the Capital Markets Act.

Taekwang Industrial further stated that a reduction in the number of circulating shares due to a high-priced public tender offer could decrease trading volume and potentially meet the criteria for delisting, thereby negatively impacting corporate value. The company pointed out that Truston's actions constituted "greenmail." In fact, as of February, Truston held nearly 67,000 shares, and if the share price rose to KRW 2 million, it could have realized a capital gain of about KRW 9.33 billion. A Taekwang Industrial official stated, "It is absolutely unacceptable for a certified asset management company to pressure the board of a listed company in pursuit of hundreds of billions of won in profit."

The company also raised suspicions about Truston's disposal of its stake on the market prior to the block deal. From May 20 to June 11, Truston was a net seller of about 9,000 shares over 11 consecutive trading days, with total sales amounting to approximately KRW 8.5 billion. Taekwang Industrial stated, "This large-scale disposal is enough to raise suspicions that Truston anticipated a decline in the share price before the block deal and took preemptive action."

The government recently announced a policy that any party found to have engaged in market manipulation or stock price rigging, even once, will be permanently expelled from the market.