ArcelorMittal Ready To Invest $500 Million in Indebted Bulgarian Steel Mill Kremikovtzi - Media

"According to a company survey the projected investments in the mill are $500 million," BTA quoted the chief marketing officer for ArcelorMittal Eastern Europe, Volker Schwich, as saying.

ArcelorMittal, which wants to buy the assets of the debt-ridden steel mill, is currently ready to invest between $100 million and $150 million in working capital for Kremikovtzi. It plans to invest some $30 million to meet ecological requirements and to increase ecological investments to $120 million in the next three years. After it buys Kremikovtzi's assets, it will invest $90-120 million levs in the plant.

ArcelorMittal wants to acquire and run an integral working enterprise, BTA quoted Schwich as saying.

"The market in southeast Europe has very good growth, we start big investments in Turkey, we restore our plant in Romania and we think that Kremikovtzi can play its role on this market," Schwich was further quoted.

ArcelorMittal aims to run the steel mill at full capacity and double the plant's monthly output to 100,000 tonnes, Schwich added. According to him, Kremikovtzi is currently working at one third of its capacity.

ArcelorMittal estimates Kremikovtzi's outstanding debt at 1.5 billion levs ($1.189 billion/770 million euro). In late May ArcelorMittal provided 30 million euro ($46.8 million) in emergency funding to Kremikovtzi to secure debt and salaries payments and for raw materials.

In late Apri, creditors launched insolvency proceedings against Kremikovtzi over combined debt of some 3.0 million levs. Court hearings on the insolvency claim have been scheduled for June 17.

According to Schwich, the insolvency proceedings will take four months to complete and there is no option for the plant not to be declared insolvent.

Kremikovtzi is majority owned by GSHL, a subsidiary of Indian steel maker Ispat Industries chaired by Indian entrepreneur Pramod Mittal, who is brother of Lakshmi Mittal, the chief executive of ArcelorMittal. The state owns 25.3% of the steel mill. Private individuals hold the remainder.

Ukrainian billionaire Konstantin Zhevago and ArcelorMittal are the two potential buyers that have been tipped to have the highest chances to acquire the majority stake in the debt-ridden steel mill.

Kremikovtzi urgently needs working capital and investments in technological and ecological upgrades to meet tougher ecological requirements set by the EU legislation and to prevent closure. GHSL has failed to secure enough capital to maintain the plant's normal operations and pay debt to creditors, the largest of which are Bulgarian state-run companies.

The plant was almost non-operational for a couple of weeks earlier this year as Bulgarian power grid operator NEK, state railway company BDZ and gas monopoly Bulgargaz cut their supplies and services to Kremikovtzi to the minimum over unpaid debt.

In April holders of a 325 million euro bond issue of Kremikovtzi were seeking early repayment of the issue, saying it had been defaulted. Dutch-based financing vehicle Bulgaria Steel Finance issued seven-year bonds with a semi-annual coupon of 12% guaranteed by Kremikovtzi in 2006.

($ = 0.6467 euro)