Investment bank Merrill Lynch has begun talks with potential investors on behalf of Pramod Mittal, the Indian owner of Bulgaria's biggest steel maker Kremikovtzi, Dnevnik daily reported on March 4 2008.

Last week, Merrill Lynch executives met steel companies that have shown some tentative interest in the Bulgarian mill, one bondholder told the paper on condition of anonymity. The investment bank was drafted in by Mittal to advise him on options facing the embattled steel company after negotiations with Ukrainian billionaire Konstantin Zhevago collapsed in January.

Among the options considered by Merrill Lynch is also the plant's closure, sources from the senior Kremikovtzi management confirmed.

In January, former Kremikovtzi chief executive director Alexander Tomov admitted there had been talks with a Qatar investment fund that was eyeing the site of the plant for residential and office development.

At the time, Tomov claimed that the talks concerned only land that is not part of the production site and insisted that the steel mill would stay in business after necessary environmental upgrades are made.

A possible closure scenario for the mill was once again rejected by Bulgarian economy minister Petar Dimitrov last week. He said a bankruptcy or liquidation was not an option and that at least five strategic investors were interested in Kremikovtzi.

As part of its efforts to force Mittal to sell Finmetals Holding, the company that owns the majority stake in the steel mill, the Bulgarian Government has arranged for gas supplies to the steel maker to be ramped down. State-controlled railway carrier BDZ has cut shipping services to the technological minimum and Kremikovtzi currently receives the minimum amount of raw materials to keep the plant installations operational.

Dimitrov has explained the moves by citing the determination of the government, a 25 per cent shareholder in Kremikovtzi, to pre-empt a siphoning-off of the company through overpriced purchases and delayed payments to state-owned utilities.