Bulgaria Invites ArcelorMittal to Participate in Liquidation of Bankrupt Steel Giant

Troubled steel giant Kremikovtzi is considered the pride of communist-era industry in Bulgaria. Photo by BGNES.

Bulgarian Minister of Economy Traicho Traikov announced he invited ArcelorMittal, the world's biggest steel producer, to participate in the liquidation sale for bankrupt metallurgical giant of Kremikovtzi.

Kremikovtzi is Bulgaria's biggest metal works and is considered a symbol of communist-era industry. It was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with a dire economic conditions, and multiple controversies about mismanagement and financial draining.

In the second part of 2009 the majority of creditors of the troubled steel-maker rejected the rescue plan for the struggling company, while workers staged numerous rallies to call on the state to approve the recovery plan and bring to justice those, who have allegedly siphoned the company. Creditors and government have struggled unsuccessfully for several months to reach agreement on a plan to salvage the plant.

Energy minister Traikov announced he had talks with senior ArcelorMittal officers in Belgium, saying that the state is committed to ensuring a transparent sale process. ArcelorMittal had expressed earlier interest in Kremikovtzi in 2008.

Currently the majority shares of the plant are held by Global Steel Holdings Limited, owned by Pramod Mittal, brother of ArcelorMittal owner Lakshmi Mittal.

The total debts of Bulgaria’s former largest steel-maker amount to BGN 1.84 B, whereas the market value of all of its assets has been estimated at BGN 837.2 M.

Workers have yet to receive BGN 56 M in unpaid salaries. Some 3 000 employees have been dismissed or have left the company, with some 3 170 staff still on the books.

Kremikovtzi's future was always a politically sensitive issue in Bulgaria.

During the last two decades the country was repeatedly shaken by news of a bad economic state and controversies around alleged financial draining that escalated 2008 and 2009. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarian football great CSKA, is currently facing trial.

Different views about the future of Kremikovtzi site have been recently discussed by the Bulgarian public and authorities, including a possible retainment of the operating mill, creating a museum, a residential neighborhood and a new industrial park.

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