Truston Asset Management submitted a second injunction request to prohibit Taekwang Industrial from issuing exchangeable bonds (EB) to the Seoul Central District Court on July 30, it announced on the 1st.
This second request focused on stopping Taekwang Industrial from acts that would harm shareholders. The first injunction request to halt the EB issuance submitted in June mainly sought to stop the illegal activities of Taekwang Industrial's directors.
Truston Asset Management noted, "This second request is based on the judgment that Taekwang Industrial is at risk of excessively diluting existing shareholder value and causing losses to minority shareholders by unnecessarily disposing of its treasury shares, which account for 24.41% of the total shares, at a significantly low price compared to fair value."
It also stated, "Truston plans to carry out this litigation with a strong sense of responsibility as an asset management firm that actively exercises shareholder rights based on the stewardship code."
Earlier, on June 27, Taekwang Industrial's board of directors decided to issue EB worth 320 billion won, targeting all treasury shares (equity ratio of 24.41%). However, amid growing controversy over shareholder value damage, Taekwang Industrial announced on the 2nd of last month that it would stop the EB issuance process.
Truston Asset Management also claimed regarding the Korea Exchange's recent designation of Taekwang Industrial as an unreliable disclosure corporation that "the illegal and opaque governance structure of Taekwang Industrial and Taekwang Group has been clearly revealed." The exchange imposed 6 points and a fine of 76 million won for non-compliance with disclosure obligations on July 30.
Truston Asset Management stated, "We will request an audit on this matter from Taekwang Industrial's audit committee," adding, "If the audit results reveal the responsibility of the directors, we also plan to proceed with a shareholder representative lawsuit for damages."