South Korea's Financial Supervisory Service under Scrutiny: Korea Zinc's Controversial Capital Increase

South Korea's financial regulatory authority is currently investigating Korea Zinc's plan to issue new shares after concerns about fair practices were raised by investors. Hahm Yong-il, Deputy Governor of the Financial Supervisory Service, stated in a briefing that the company and involved securities brokers would be held accountable if misconduct is proven. A review of the issuance plans could even require Korea Zinc to submit a revised proposal if essential points that could influence investors' decisions are found to be missing. The announcement by the world's largest zinc refinery to issue new shares worth approximately $1.8 billion caused its stock prices to plummet rapidly. Interestingly, this move came just two days after a share buyback at a higher price, in which the repurchase of all shares was promised to increase shareholder value. The company, led by the Choi family, had raised significant funds to acquire those shares worth $1.5 billion, aimed at thwarting a takeover by the largest shareholder Young Poong and its partner MBK. Korea Zinc plans to use the majority of the funds raised through the new share issue to repay debts. The Choi family is engaged in a fierce power struggle over the $18 billion zinc empire with the Chang family, who co-founded Young Poong and, together with private equity firm MBK Partners, had made a takeover bid.