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Home > India > Business > PTI > Report

Mittal intensifies efforts to buy kin's Bulgarian plant

April 18, 2008 14:41 IST

Steel tycoon Lakshmi Niwas Mittal has intensified efforts to acquire his younger brother Pramod Mittal's ailing Kremikovtzi steel plant in Bulgaria, even as workers of the plant continued to protest over delayed wages.

"Around 1,000 workers at Kremikovtzi continued their protests on Thursday over delayed salaries and food allowance payments," the Steel Business Briefing reported quoting a spokesman for the trade union Militzi.

The company still has to pay 20 per cent of workers for February salaries and food allowances for December 2007 and January 2008, Militzi said.

"With this protest, we are trying to raise the government's awareness in order to take urgent measures for the company's future. Kremikovtzi needs to find a new owner immediately and begin to operate effectively," SBB quoted him as saying.

Meanwhile ArcelorMittal representatives, in a meeting with the Bulgarian Energy and Economy Minister Petar Dimitrov on Wednesday, confirmed their interest in acquiring Kremikovtzi.

Lakshmi Mittal, the older brother of Pramod Mittal, who now owns 71 per cent in Kremikovtzi, is one of at least two potential investors left in the race for Kremikovtzi. US Steel has withdrawn from the race for the plant, while Ukranian billionaire Rinat Ahmetov too appears to have lost interest, Bulgarian daily The Sofia Echo reported, quoting an unnamed holder of Kremikovtzi bonds.

SBB said ArcelorMittal executive Michel Wurth expressed the company's awareness of the serious financial and technical problems facing Kremikovtzi. Both the parties agreed that urgent measures were need to be taken to revitalize Bulgaria's largest steelworks. 

The Bulgarian government had sold 71 per cent stake in the plant to Bulgarian Finmetals Group in 1999 for a token amount of one dollar, along with its outstanding debts. Later in 2005, Global Steel acquired Finmetals and got the control of the mill as well.

Meanwhile, Indian-born steel magnate Lakshmi Mittal is expected to arrive in Sofia for talks with Bulgarian Premier Sergei Stanishev about the future of Bulgaria's biggest steel mill Kremikovtzi next week, the Sofia Echo said.

Lakshmi Mittal is willing to offer euro50 million, just one third of his brother's euro150 million valuation of Kremikovtzi, the Sunday Times had recently reported.

The holders of Kremikovtzi's 325-million-euro bond issue, who are understood to be pressuring Pramod Mittal into selling his stake, are ready to liquidate the mill's assets unless they find an investor willing to pay out 101 per cent of the bond principal.

Bulgaria's government, which owns 25 per cent in Kremikovtzi, has staunchly maintained that it would block any move in that sense.

The plant has been in the midst of labour unrest and also faces the possibility of being re-nationalised by the Bulgarian government.

The Mittal Steel-Arcelor saga

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