FIBank Fully Behind Bulgaria Bankrupt Steel Mill Deal

Bulgaria's privately-owned First Investment Bank (FIBank) said it had provided the balance of the full price for the acquisition of the country's biggest steel mill Kremikovtzi.

The bank has provided bridge financing to Nadin Metals Trade and Velpet Konsult - two of the strategic partners of Eltrade Company, the firm which won the tender for the production assets of insolvent steel mill Kremikovtzi on Tuesday.

The news comes just a day after the bank announced it had extended a loan of EUR 59 M to the buyer of the country's biggest steel mill Kremikovtzi despite the controversy surrounding the deal.

At the end of last month First Investment Bank issued a EUR 20 M bond, which allowed it to boost its credit portfolio by more than BGN 320 M, which is exactly the price of Kremikovtzi sale deal.

Bulgaria finally sold on Tuesday the production assets of Kremikovtzi steel mill in a fourth auction to a newly established local company, owned by 26-year-old Lachezar Varnadzhiev.

The sale price was BGN 316 M (nearly EUR 162 M). Eltrade company paid a 31 million lev deposit and paid the balance of the full price on Thursday.

Even though the buyer declined to reveal what he plans to do with the plant just outside the capital Sofia, First Investment Bank argues that part of the suspended operations of the steel mill, including steel production, can be revived.

"Whether and how this could happen is all up to the buyer," the bank said.

The bank stressed it has analyzed the money flow expected in the case of the two possible scenarios - an operating company, as well as liquidation of the assets.

According to the lender either way there is no risk of default.

"Eltrade company" was established on March 8, 2011 and its capital is a mere BGN 20 000, a check in the Trade Registry shows, triggering suspicions who stays behind it. It is Varnadzhiev's only company and it is supposed to be a black and colored metal dealer.

"Eltrade company" has the same address as Nadin - N, a well established scrap dealer. Vladimir Todorov, member of Nadin – N's board of directors, was present at Tuesday's auction.