[Alpha Biz= Paul Lee] Truston Asset Management announced on June 29 that it has filed for an injunction to halt Taekwang Industrial’s planned issuance of ₩320 billion in exchangeable bonds (EBs) backed entirely by the company’s treasury shares. The firm also said it intends to pursue civil and criminal liabilities against the company’s board members.
According to Truston, Taekwang Industrial’s board approved the EB issuance on June 27, involving treasury shares representing 24.41% of the company’s total equity. The EBs are zero-coupon, zero-yield bonds with a 3-year maturity and will be issued through a private placement.
Truston strongly opposes the issuance, arguing that using treasury shares as the underlying exchangeable asset effectively results in a de facto third-party allotment, thereby diluting existing shareholder value.
“Such an EB structure severely infringes upon the rights of current shareholders,” the asset manager stated. “Taekwang Industrial’s cash position—₩1.4 trillion in liquid assets as of Q1, ₩900 billion in proceeds from its SK Broadband stake sale, and real estate in Seongsu-dong valued at around ₩1 trillion—raises serious questions about the necessity of this EB issuance.”
Truston emphasized it will seek legal recourse to block the transaction and hold the company’s directors accountable for any breach of fiduciary duty.
Alphabiz Reporter Paul Lee(hoondork1977@alphabiz.co.kr)
