(Bloomberg) -- South Korea’s financial watchdog will press ahead with its probe into Korea Zinc Co.’s disputed $1.8 billion share sale plan, which the company scrapped on Wednesday bowing to regulatory pressures.
The Financial Supervisory Service will continue the probe as the investigation on unfair transaction concerns is already under way, FSS governor Lee Bokhyun told reporters late on Wednesday in Hong Kong.
“I think it would be very inappropriate for me, even as the head of the agency, to just close it off without going through the process,” Lee added.
The world’s biggest zinc miner scrapped the plan in two weeks since the announcement after the FSS ordered the company to revise its share sale filing. It found the initial plans lacking specifics, including around the decision-making process and due diligence on the arranger. The watchdog launched an investigation and vowed to conduct a swift probe that raised questions about the future of the deal.
In a dramatic turn of events on Wednesday, the company not just withdrew the offer, but it also decided to replace Chairman Choi Yun-beom as the head of the board. The hasty retreat is a blow to Choi’s attempt to counter a hostile offer to take control of the company. Choi will carry on the chief executive officer.
“It’s a bit difficult to say that the withdrawal in and of itself has any impact on whether or not we will investigate or we will do so with what level of intensity,” Lee added.
Shares of Korea Zinc surged as much as 8.9% on Thursday, after tumbling 14% the previous day.
Wednesday’s action caps two months of bitter public fighting over the direction and strategy of the company, founded by two friends who fled North Korea. The battle has been closely watched in Korea, but also in global metal markets, given Korea Zinc’s position as a major non-Chinese producer of key material required for energy transition.
The feud between the two shareholder groups burst into public view in September, after private equity firm MBK Partners Ltd teamed up with Korea Zinc’s top investor Young Poong Corp. and launched an unsolicited takeover bid, which eventually gave the suitors 39.8% control of the company. Choi, the grandson of one of the founders, responded by launching a share buyback by roping in Bain Capital, giving that side more than 35% ownership.
--With assistance from Seyoon Kim.
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