Bulgarian Steel Behemoth Kremikovtzi's Assets Bought by Eltrade

Industry | April 12, 2011, Tuesday // 14:47|  views

The idle Kremikovtzi steel mill's assets were sold to the only bidder on Tuesday. Photo by BGNES

The assets of bankrupt Bulgarian steel mill Kremikovtzi were bought at the fourth auction by "Eltrade company", which was the only bidder and paid the initial price of BGN 316 M (nearly EUR 162 M).

Shortly after the deal, the Mediapool agency reported that the company is owned by a 26 year-old Bulgarian citizen and has been established a month ago.

The site and assets of the struggling company, built in the 1960s, were offered for sale four months after the behemoth was sent into liquidation, its businesses -  wound up and its assets – offloaded.

The first two auctions of Kremikovtzi failed to attract any bidders last year. The price started at BGN 565 517 510, which according to trade unions and analysts is far below the market price.

The third tender for the mill's production capacities was held in February 2011, but fell though after the sole prospective bidder failed to submit a deposit.

The smelter shut down some of its furnaces in 2009 due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago canceled a deal with the plant.

It was previously owned by Pramod Mittal, the younger brother of ArcelorMittal Chief Executive Officer Lakshmi Mittal.

The auctions come more than a year after 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.

The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with dire economic conditions, and multiple controversies about mismanagement and financial draining. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarian football great CSKA, faced trial.

At the end of January this year Tomov was sentenced to nine years in jail by a Sofia city court for selling off plots of land owned by Kremikovtzi at well below the market price.

He was also found guilty of embezzling EUR 7.5 M while serving as the company's chief executive after it was taken over by Global Steel Holdings, controlled by Pramod Mittal.

The total debts of Bulgaria's former largest steel-maker amount to BGN 1,9 B, whereas the market value of all of its assets has been estimated at BGN 837 M.

Kremikovtzi, one of Bulgaria's biggest companies, provided jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections in the summer of 2009.

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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Tags: Kremikovtzi, bankrupt, steel mill, eltrade, assets, Alexander Tomov, pramod mital


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