Bulgaria Admits Ailing Steel Maker Sale Hits Stalemate

Bulgaria's economy and energy minister admitted talks over the purchase of insolvent steel mill Kremikovtzi have been bogged down, blaming it on low prices on foreign markets. File photo by Nadya Kotseva (Sofia Photo Agency)

Bulgaria's economy and energy minister admitted talks over the purchase of insolvent steel mill Kremikovtzi have been bogged down, blaming it on low prices on foreign markets.

"The state has been lending a helping hand to the trade unions at Kremikovtzi for more than a year already. But you can't bring an investor here at a gunpoint," Minister Petar Dimitrov told reporters on Thursday.

He confirmed that Brazilian steel maker CSN has expressed interest in Kremikovtzi, but said investments in the ailing Bulgarian steel maker at this point will not be profitable.

No progress has been reported so far in negotiations with Brazil's CSN.

The ministry has conducted only general talks with the Russian company Finprominvest, which made public its interest in Kremikovtzi last week, shortly after the Ukrainian Smart Group announced its withdrew its interest in buying or running the Bulgarian steel factory.

Bulgaria sold 71% stake in Kremikovtzi to the Bulgarian Finmetals Group in 1999 for a token USD 1 along with debts to the state and suppliers standing at USD 420 M.

In mid-2005, Global Steel Holding Ltd. (GSHL) bought Finmetals and took control of the mill, which employs 8,000.

The company put forward but failed to implement an ambitious turnaround plan, which aimed to upgrade it to EU environmental standards, improve productivity, quality and margins.

The government holds 25.3% of Kremikovtzi and its seal of approval is crucial for inking a sale deal.

Bulgarian court declared Kremikovtzi insolvent in August last year. In October the smelter shut down some of its furnaces due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago cancelled a deal with the plant.

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