(2nd LD) Korea Zinc to issue new shares for management defense

Korea Zinc Co. said Wednesday it will issue new shares in its stepped-up efforts to help fend off a takeover attempt by the coalition of its biggest shareholder and a private equity firm. Korea Zinc plans to issue 3,732,650 shares, equivalent to about 18 percent of its outstanding shares, to raise 2.5 trillion won (US$1.8 billion) at about 670,000 apiece, with the subscriptions scheduled on Dec. 3-4, the company said in a regulatory filing. The company said it will allocate 20 percent of the new shares for subscriptions by employees on Dec. 3. The final price will be fixed days before the subscriptions begin, Korea Zinc said in a statement. "The planned rights issue is aimed at preventing further volatility in the stock price amid an intensifying battle over the control of Korea Zinc with Young Poong Corp. and MBK Partners," it said. The share sale is also to avoid the possible designation of the world's biggest refined zinc smelter as an issue of concern at the Korea Exchange and involuntary delisting f rom the main bourse, the statement added. But the move is widely seen as part of Korea Zinc's efforts to secure more treasury stocks with voting rights in the battle with the Young Poong camp. MBK argued Korea Zinc Chairman Choi Yun-beom keeps using company resources to maintain his management control at the expense of the interests of existing shareholders. "MBK and Young Poong will take all possible legal actions to block the share sale plan," they said in a statement. Currently, the Young Poong side owns a 38.47 percent stake in Korea Zinc following a tender offer, while Choi and related parties collectively hold 35.4 percent after a buyback. On Wednesday, Korea Zinc plunged by the daily limit of 30 percent to 1,081,000 won, far underperforming the broader Korea Composite Stock Price Index's 0.9 percent loss. Source: Yonhap News Agency