SEOUL: Shares of Korea Zinc fell 29.9 percent to their daily lower limit on Wednesday after the world’s top zinc refiner announced plans to issue new shares worth around 1 .8 billion dollars, just two days after buying back its shares at a higher price.

Led by the Choi family, Korea Zinc is waging a bitter fight to control the $18 billion zinc empire with co-founding Chang family, whose conglomerate Young Poong made an initial joint bid with the private equity firm MBK Partners in September.

Korea Zinc, which had borrowed heavily to buy back $1.5 billion of its shares at a high price to help fend off a takeover attempt by its major shareholder Young Poong and partner MBK, said the major Part of the proceeds would be used to repay the debt.

Korea Zinc said it would allocate 20 percent of newly issued shares to its employee shareholding association, which experts said would increase the number of shares favorable to the management team.

MBK condemned the capital increase on the grounds that it would dilute the value of existing shares and said it showed Korea Zinc’s management disregarded shareholders. MBK added that it would seek legal measures to stop this move. Korea Zinc did not immediately respond to a request for comment on MBK’s response.

Korea Zinc said in a regulatory filing that its board of directors decided on Wednesday to issue some 3.73 million shares at an estimated price of 670,000 won per share, 57 percent lower than the closing price. Tuesday of 1,543,000 won.

The surprise move came after Korea Zinc bought back 9.85 percent of the company’s shares on Monday for 890,000 won each, following a $1.5 billion takeover bid launched to prevent the shareholders to sell their stakes to Young Poong and MBK.

Korea Zinc’s management team risks losing investor confidence due to the new stock issuance apparently aimed at consolidating control of the company, said Lee Chang-min, a corporate governance specialist at the Hanyang University, Seoul.

“Korea Zinc is going in the opposite direction to increase shareholder value. They are not sending a good signal to the market,” he said.

Korea Zinc said in a statement that issuing new shares would expand the company’s shareholder base and reduce the risk of delisting from the stock exchange due to lack of liquidity.

The company said that of the 2.5 trillion won in funds to be raised, 2.3 trillion won would be used to repay debt.

The new shares will be listed on December 18, the filing added.

($1 = 1,382.9400 won)