Ukrainian steelmaker Smart Holding said on February 25 that it would discontinue talks to take over Bulgaria's biggest steel mill Kremikovtzi, now under court receivership, because it received no support from Kremikovtzi's creditors, Reuters reported.

The steel group had offered to invest up to 220 million euro in Kremikovtzi, loan $60 million to the steel mill to boost cashflow and pay debts worth 80 million euro, Reuters said. The rest of the debt, worth an estimated two billion leva, would have been converted into new shares.

"Considering that the negotiations on choosing a strategic partner for Kremikovtzi are being dragged out indefinitely ... Smart Holding was forced to take the decision of withdrawing from the negotiating process," Smart Holding said in a statement.

The stumbling block was the unwillingness of the hedge funds that hold the bulk of Kremikovtzi's 325 million euro bond issue, while the Bulgarian Government, which holds 25 per cent of the steel mills shares, was "cooperative".

Smart Group, along with Brazil's CSN, were identified by Bulgaria's Economy Ministry as the two companies that it was in talks with to take over the operation of the steelworks, which is now undergoing protracted bankruptcy procedures.

With less than six months left before Parliament elections, the Cabinet is racing against time to find even a temporary solution to keep Kremikovtzi afloat. Employing 5000 people, Kremikovtzi is also a key customer for Bulgarian ports and the state railways company, providing the incomes of at least another 50 000 households, labour unions claim.