https://alphabiz.co.kr/news/view/1065613558473614
[Alpha Biz= Kim Jisun] Seoul, South Korea – April 23, 2025 — The Seoul
Southern District Prosecutors’ Office has launched a full-scale
investigation into Korea Zinc Co., Ltd., suspecting illegal activities
related to a rights offering during a management dispute last year.
On
April 23, prosecutors from the Financial and Securities Crime Joint
Investigation Unit conducted search and seizure operations at Korea
Zinc’s headquarters, the residences of key executives, and the offices
of investment banks Mirae Asset Securities and KB Securities, which
served as underwriters for the capital raise.
Among those
designated as suspects are Chairman Choi Yoon-Beom, CEO Park Ki-Duk,
Vice President Lee Seung-Ho, and a senior finance executive. A separate
accounting officer is being investigated for allegedly violating laws
prohibiting the use of undisclosed material information.
At
the center of the investigation is a ₩2.5 trillion (approx. $1.8 billion
USD) rights offering announced on October 30, 2024. Prosecutors believe
Korea Zinc misled the market by failing to disclose the capital raise
during a public tender offer for its own shares between October 4 and
October 23. During that period, the company declared in regulatory
filings that no plans existed to change its capital structure — a
statement that may now be viewed as materially false or misleading.
According
to the prosecution and the Financial Supervisory Service (FSS),
internal preparations for the rights offering were already underway,
with due diligence being conducted by underwriters during the same
period. Authorities suspect that Korea Zinc had prearranged a plan to
retire treasury shares using borrowed funds and later reimburse the debt
through the rights issue, which was not disclosed to investors in the
tender documents.
The company withdrew the rights offering plan on November 13,
2024, amid growing criticism from regulators and minority shareholders.
Legal
experts say the probe may result in criminal charges against Korea
Zinc’s senior leadership, including potential violations of the Capital
Markets Act, which could carry severe penalties if proven.
Southern District Prosecutors’ Office has launched a full-scale
investigation into Korea Zinc Co., Ltd., suspecting illegal activities
related to a rights offering during a management dispute last year.
On
April 23, prosecutors from the Financial and Securities Crime Joint
Investigation Unit conducted search and seizure operations at Korea
Zinc’s headquarters, the residences of key executives, and the offices
of investment banks Mirae Asset Securities and KB Securities, which
served as underwriters for the capital raise.
Among those
designated as suspects are Chairman Choi Yoon-Beom, CEO Park Ki-Duk,
Vice President Lee Seung-Ho, and a senior finance executive. A separate
accounting officer is being investigated for allegedly violating laws
prohibiting the use of undisclosed material information.
At
the center of the investigation is a ₩2.5 trillion (approx. $1.8 billion
USD) rights offering announced on October 30, 2024. Prosecutors believe
Korea Zinc misled the market by failing to disclose the capital raise
during a public tender offer for its own shares between October 4 and
October 23. During that period, the company declared in regulatory
filings that no plans existed to change its capital structure — a
statement that may now be viewed as materially false or misleading.
According
to the prosecution and the Financial Supervisory Service (FSS),
internal preparations for the rights offering were already underway,
with due diligence being conducted by underwriters during the same
period. Authorities suspect that Korea Zinc had prearranged a plan to
retire treasury shares using borrowed funds and later reimburse the debt
through the rights issue, which was not disclosed to investors in the
tender documents.
The company withdrew the rights offering plan on November 13,
2024, amid growing criticism from regulators and minority shareholders.
Legal
experts say the probe may result in criminal charges against Korea
Zinc’s senior leadership, including potential violations of the Capital
Markets Act, which could carry severe penalties if proven.
