TruStone Files Additional Injunction Over Taekwang Industrial’s Exchangeable Bond Issuance

TruStone Asset Management (TruStone) announced on August 1 that it had submitted a second injunction request to the Seoul Central District Court, seeking to prohibit Taekwang Industrial from issuing exchangeable bonds (EB).

A TruStone representative stated on this day, "The main content of this second application, which was filed on July 30, is to demand that Taekwang Industrial itself stop actions that cause harm to shareholders." The representative further explained, "Unlike the first injunction request, which sought to prevent company damage resulting from illegal acts by Taekwang Industrial's directors, this second application clearly differs in both the respondent and the party suffering the damage."

TruStone argued that Taekwang Industrial’s planned EB issuance fundamentally and seriously infringes upon shareholder rights guaranteed by the revised Commercial Act. The company claims that Taekwang Industrial is unnecessarily disposing of treasury shares amounting to 24.41% of its total stock, and at a price significantly below fair value, which would excessively dilute the value of existing shareholders.

The current conflict between the two parties began when the Taekwang Industrial board of directors decided on July 27 to issue EBs based on the company’s entire treasury stock (approximately 24.4%), to which TruStone strongly objected. EB refers to a type of bond that can be exchanged for specific shares after a certain period. TruStone immediately filed for an injunction with the court, citing a breach of the directors’ duty of loyalty, and Taekwang Industrial, which also faced criticism from financial authorities, has temporarily suspended the EB issuance.

A TruStone representative added, "As an asset management company that actively exercises shareholder rights based on the Stewardship Code (principle of fiduciary responsibility), we plan to pursue this injunction case with a strong sense of responsibility."