Talks Underway With Investors Eyeing Kremikovtzi Steel Mill

Investment bank Merrill Lynch has began talks with potential investors on behalf of Pramod Mittal, the Indian owner of Bulgaria's biggest steel maker Kremikovtzi, Dnevnik daily reported on March 4.

Last week, Merrill Lynch executives met metallurgical companies expressing some tentative interest in the Bulgarian mill, said the bondholder on condition of anonymity.

The investment bank was drafted in by Mittal to advise on alternatives facing the embattled steel company after negotiations with Ukrainian billionaire Konstantin Zhevago collapsed.

Among the options considered by Merrill Lynch is also the plant's closure, sources from the senior Kremikovtzi management confirmed.

In January, former Kremikovtzi chief executive director Alexander Tomov admitted there had been talks with a Qatar investment fund that was eyeing the site of the plant for residential and office development.

At the time, Tomov claimed that the talks concerned only land that is not part of the production site and insisted that the steel mill would stay in business after necessary environmental upgrades are made.

A possible closure scenario for the mill was once again rejected by Bulgarian economy minister Petar Dimitrov last Friday. He said a bankruptcy or liquidation outcome was not an option and that at least five strategic investors were eyeing Kremikovtzi.

As part of its efforts to force Mittal to sell Finmetals Holding, a 17 per cent shareholder in Kremikovtzi, the Bulgarian government has arranged for gas supplies to the steel maker to be ramped down. State-controlled railway carrier BDZ has cut shipping services to the technological minimum and Kremikovtzi currently receives the minimum amount of raw materials to keep the plant installations operational.

Dimitrov has explained the moves by citing the determination of the government, a 25 per cent shareholder in Kremikovtzi, to pre-empt a siphoning-off of the company through overpriced purchases and delayed payments to state-owned utilities.propertywisebulgaria.com