Taekwang Industrial has decided to temporarily suspend its procedures for issuing its own exchangeable bond (EB), which has become controversial. This decision follows a request for a provisional injunction from Truston Asset Management, the second-largest shareholder (6.09% equity), claiming that the issuance of EB by Taekwang Industrial is illegal.
On the 2nd, Taekwang Industrial issued a statement saying, "In relation to the issuance of the held own shares-based EB, we have decided to halt further procedures until the court's decision on Truston's application for a provisional injunction is made" and added, "We will closely communicate with stakeholders such as minority shareholders and labor unions and respect their opinions and positions."
Truston applied for a provisional injunction on the 1st, claiming that the EB issuance decided by the Taekwang Industrial board on the 27th of last month violates commercial law. At that board meeting, Taekwang Industrial approved the issuance of a 320 billion won EB targeting all of its own shares (24.41% equity).
The issue is that Taekwang Industrial did not disclose who it would issue the EB to. Under current law, listed companies must resolve the trading counterpart when disposing of their own shares at the board meeting. Truston claims that the Taekwang Industrial board's failure to clearly determine the trading details constitutes a violation of commercial law.
Truston stated that if Taekwang Industrial continues to proceed with the EB issuance process despite the provisional injunction application, it would take further legal action against the relevant directors, such as a shareholder derivative lawsuit and a criminal complaint. The Financial Supervisory Service has also issued a correction order regarding Taekwang Industrial's EB issuance report for the same reason.
On that day, Taekwang Industrial said, "Through this opportunity to communicate with stakeholders, we will explain in detail the current business status and plans of the petrochemical industry and the necessity of funding, and we will fully listen to stakeholders' concerns and opinions," adding, "We respect the court's decision on Truston's application for a provisional injunction and plan to reflect stakeholders' opinions in future decision-making."