Taekwang Industry, a subsidiary of Taekwang Group involved in textiles and petrochemicals, has announced plans for legal action against Truston Asset Management, which has raised allegations of management intervention and shareholder value destruction. The two parties continue to clash over issues related to Taekwang Industry's stock price, use of treasury shares, issuance of exchangeable bonds (EB), and investments in new businesses.
On September 4, Taekwang Industry issued a statement regarding Truston's shareholder letter, asserting that "Truston is obstructing normal business activities and restructuring for future growth by making baseless allegations."
According to Taekwang Industry, Truston reported acquiring a 5% stake in the company in June 2021, but as of the end of June this year, it holds only 1.3% after buying and selling shares. The initial purchase price for Truston's shares is estimated to be around 900,000 won per share, and it is estimated that Truston has incurred a loss of about 2.5 billion won after selling approximately 17.5 billion won worth of shares at around 800,000 won each last year and this year.
Taekwang Industry criticized Truston for blaming the company and its management for losses incurred due to an inability to predict the structural downturn in the petrochemical industry. The company expressed skepticism about Truston's repeated public letters, suggesting they may be a form of "noise marketing" to evade responsibility for investment failures and to enhance its recognition in the asset management market.
Taekwang Industry explained that it is pursuing a business restructuring to secure new growth drivers, as it believes relying solely on its existing petrochemical and textile business structure is insufficient for future growth. The company is also exploring investments and acquisitions in new sectors, including cosmetics, pharmaceuticals, and hotels, to expand its business into consumer goods, biotechnology, healthcare, and tourism.
Regarding Truston's demand last year for a public buyback of treasury shares at 2 million won per share when Taekwang's stock was trading in the 600,000 won range, Taekwang called it an "irrational demand". The company also noted that a court dismissed Truston's injunction against Taekwang's EB issuance plan last year.
Taekwang Industry stated, "Despite the court not accepting their claims and demands, Truston has once again raised unfounded allegations of management intervention through a management support committee in this shareholder letter," urging Truston to immediately cease its irresponsible behavior of raising suspicions without concrete evidence.
Taekwang Industry described the role of the management support committee as a "consultative body for enhancing cooperation and synergy among affiliates," asserting that sharing information and collaborating among affiliates during large-scale business restructuring and new business initiatives is a standard management activity within corporate groups.
The company announced its intention to take legal action, stating that Truston's allegations are damaging the company's credibility and corporate value while obstructing normal business restructuring. Taekwang Industry has begun legal reviews regarding Truston's claims and actions, asserting that it will hold accountable any illegal acts, including the dissemination of false information and violations of capital market laws.
In response to Taekwang's assertions, Truston refuted the claims, stating they are inaccurate. Truston maintains that it has never demanded illegal stock price support or high-priced public buybacks, and that the public buyback was proposed as an alternative for treasury share purchases at the request of Taekwang's management. Truston also denied allegations of obstructing business restructuring, noting its support for additional business objectives related to the acquisition of Aekyung Industrial and Dong Sung Pharmaceutical.
Truston clarified that its request for compensation for investment losses was merely a call for accountability from management due to the stock price decline. Regarding the management council, Truston argued that its actions were legitimate exercises of shareholder rights, pointing out governance issues such as the involvement of an unofficial body without constitutional basis in decision-making and cost-shifting.
* This article has been translated by AI.
Copyright ⓒ Aju Press All rights reserved.