Taekwang Industrial Rebuts Truston’s Allegations of Management Interference, Warns of Legal Action

[Financial News] Taekwang Industrial has flatly denied allegations by Truston Asset Management that Taekwang Group’s Management Support Council was involved in the company’s major decisions, warning that it would consider legal action. On the 4th, Taekwang Industrial said in a statement regarding Truston Asset Management’s public shareholder letter, "Taekwang Industrial’s major management decisions are made independently through lawful procedures, including review by the board of directors, in accordance with relevant laws and the company’s articles of incorporation."
The dispute erupted after Truston Asset Management sent a public letter to Taekwang Industrial’s board of directors. Truston raised the possibility that Taekwang Group’s Management Support Council had been involved in major decisions last year, including the issuance of exchangeable bonds (EB), the corporate value enhancement plan and the shareholder return policy, and demanded answers from the board.
Taekwang Industrial explained that the Management Support Council is a consultative body designed to promote cooperation and synergies among affiliates. While affiliates may share information and coordinate their views during business restructuring and the pursuit of new businesses, the company said the council does not replace the decision-making authority of individual companies.
Taekwang Industrial called Truston Asset Management’s allegations baseless and began a legal review. It said it would examine whether Truston’s claims and actions constitute the dissemination of false information or violations of the Capital Markets Act, and would seek legal accountability if any unlawful conduct is confirmed.
The conflict between the two sides over Taekwang Industrial’s use of treasury shares and shareholder return policy has continued since last year. Truston demanded that Taekwang Industrial launch a tender offer for its own shares at 2 million won per share and then retire them. It also opposed Taekwang Industrial’s issuance of EB last year and filed an injunction application. The court dismissed the application at the time.
The direction of business restructuring is another point of contention. Taekwang Industrial says it needs to invest in new businesses to move away from its petrochemical- and textile-centered business structure. It has described the acquisition of Aekyung Industrial and investment in Dongsung Pharmaceutical as investments aimed at restructuring its existing business portfolio. Truston, however, has raised concerns about capital allocation during the new-business investment process, the independence of the board and the level of shareholder returns.

[email protected] Kim Mi-hee Reporter