EcoPro BM execs may step down on alleged insider trading

EcoPro BM Co., South Korea’s leading battery material producer, is considering resignations of its key executives, including the holding company’s chairman, sources said, as local prosecutors probe allegations of insider trading, which has dampened their stocks.

EcoPro BM, the second-largest company by market capitalization on the country’s junior Kosdaq, lost 4.07% to close at 325,600 won ($271.1) on Monday, far underperforming a 0.2% dip in the index. Its holding company EcoPro Co. also tumbled 5.3%.

Both stocks have declined more than 20% respectively since Jan. 26 when The Korea Economic Daily exclusively reported that EcoPro BM, the country’s top cathode material manufacturer, was under investigation by local prosecutors for allegations of insider trading.

Key executives including Lee Dong-che, the founder and chairman of EcoPro, the holding company of EcoPro BM, were booked as suspects. The Financial Services Commission fast-tracked the investigations after the regulator became aware of the allegations. The regulator usually takes such steps when it is concerned that key suspects could destroy evidence.

CHAIRMAN READY TO DO ANYTHING FOR COMPANY

Foreign investors dumped a total of 116 billion won worth of EcoPro BM stocks in the six sessions to Monday, while local institutional investors sold 40.6 billion won during the period.

Pressures mounted on EcoPro BM from shareholders to boost stock prices with institutional investors urging swift measures.

The company was mulling a major reshuffle of executives with Lee stepping down since a possible indictment of the chairman is expected to disrupt management, industry sources said.

EcoPro BM has few options currently to bolster share prices since it already set up production expansion plans. It is unlikely to win a major order from battery makers, while a potential share buyback is not expected to lift stock prices much as the company has lost confidence among investors.

“Chairman Lee said he will do anything for the company,” said an EcoPro BM source. “It is true that we have few options to raise shareholder value except a management overhaul.”

Some analysts predicted further falls in EcoPro BM’s share prices, given the expected trials and indictments of executives, while others said the recent declines in the share prices were excessive. EcoPro BM’s 12-month forward price-to-earnings ratio has fallen to 40 times from 47 times a year earlier.

Write to Yun-Sang Ko at kys@hankyung.com
Jongwoo Cheon edited this article.