Prosecutors on the 4th searched and seized Korea Zinc, Mirae Asset Securities, KB Securities and Hana Bank. They are looking into whether there were violations of the Financial Investment Services and Capital Markets Act during Korea Zinc's rights offering last year worth 2.5 trillion won.
Mirae Asset Securities and KB Securities were the tender offer managers and the arrangers for the rights offering at the time. Hana Bank is where Korea Zinc borrowed funds needed for the company's share buyback tender offer.
The Joint Investigation Team on Financial and Securities Crimes at the Seoul Southern District Prosecutors' Office (headed by Senior Prosecutor Kim Jin-ho) said that morning, "We are conducting search and seizure on certain departments of Korea Zinc, KB Securities, Mirae Asset Securities and Hana Bank in connection with the unfair trading case involving Korea Zinc that was referred by the Financial Services Commission." This is the second time prosecutors have carried out a search and seizure related to Korea Zinc's rights offering since on Apr.
Korea Zinc conducted a tender offer for its own shares from Oct. 4 to Oct. 23 last year amid a management control dispute with Young Poong and MBK Partners. Then, seven days later on Oct. 30, it announced a rights offering worth 2.5 trillion won.
This prompted allegations that Korea Zinc planned a rights offering before the tender offer ended but failed to properly disclose it. At the time of the tender offer, Korea Zinc disclosed, "We are not formulating plans that would change the financial structure after the tender offer." However, it was revealed that the manager Mirae Asset Securities began due diligence for the rights offering on the 14th of the same month.
The Financial Supervisory Service (FSS) demanded a correction to the securities registration statement, saying it could cause significant misunderstanding for investors, and Korea Zinc withdrew the rights offering decision on Nov. 13 last year. In Jan., the Financial Supervisory Service (FSS) filed a complaint with the Seoul Southern District Prosecutors' Office against Korea Zinc's management and others on suspicion of violating the Financial Investment Services and Capital Markets Act.