Truston Files Injunction to Block Taekwang EB Issuance... Taekwang Calls It "An Immoral Scheme" (Comprehensive)

Truston Asset Management (Truston) 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). In response to Truston's actions, Taekwang Industrial countered by calling them "an immoral scheme."

A Truston representative stated on this day, "The main content of this second application, which was filed on July 30, is a request for Taekwang Industrial itself to stop actions that harm shareholders." The representative added, "Unlike the first injunction, which sought to halt company damages caused by illegal acts of Taekwang Industrial's directors, this second application clearly differs in both the respondent and the party suffering damages."

Truston argued that Taekwang Industrial's EB issuance fundamentally and seriously infringes on shareholder rights guaranteed by the amended Commercial Act. Truston's position is that Taekwang Industrial is unnecessarily disposing of treasury shares amounting to 24.41% of total shares, and at a price significantly below fair value, thereby excessively diluting the value of existing shareholders.

This conflict began when Taekwang Industrial's board of directors decided on July 27 to issue EBs based on the entirety of its treasury shares (approximately 24.4%), to which Truston strongly objected. EB refers to a bond that can be converted into specific shares after a certain period. Truston immediately filed for an injunction, citing a breach of directors' fiduciary duty, and following criticism from financial authorities, Taekwang Industrial temporarily suspended the EB issuance.

The Truston representative added, "As an asset management company that actively exercises shareholder rights based on the Stewardship Code (Principles of Fiduciary Responsibility), we plan to carry out this injunction case with a strong sense of responsibility."

Taekwang Industrial responded, "With the court's decision on the first injunction imminent, Truston's filing of a second injunction is a clear declaration of preemptive non-acceptance of the court's decision. If they were confident the first application would be granted, there would be no reason to file a second one."

They further argued, "Truston filed the second injunction to prolong legal disputes over the EB issuance even if the first injunction is dismissed. This is an immoral scheme that abuses the judicial system to protect their own capital gains."

Taekwang Industrial pointed out, "The essence of Truston's second injunction application is the same as the first, as it still challenges the appropriateness of the EB issuance, only changing the respondent from 'Taekwang Industrial directors' to 'Taekwang Industrial' itself."