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Photo = Korea Zinc |
[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.
AlphaBIZ Kim Jisun(stockmk2020@alphabiz.co.kr)
