Bulgaria's Supreme Administrative Court (SAC) is set to hear on March 23 an appeal lodged by the receivers of Kremikovtzi steelworks against an earlier ruling that made the Bulgarian state the steel mills biggest creditor, Dnevnik daily reported on March 22.

The ruling in question said that because Kremikovtzi's owners did not invest to carry out the mill's modernisation plan, they now had to pay back 431 million leva extended as state aid, as well as an additional 264 million leva in interest.

Those 695 million leva boosted Kremikovtzi's total debt to the state to about 950 million leva, which put the state ahead of the holders of Kremikovtzi bonds, who are owed about 692 million leva. The Cabinet and the bondholders have found themselves repeatedly at odds concerning the future of the steel mill.

Quoting sources familiar with the proceedings, Dnevnik said that the grounds for the appeal was that the initial case paperwork had been lodged by the Economy Ministry, whereas only the Finance Ministry or the National Revenue Agency had the legal right to do so.

Should the SAC accept the reasoning and cancel the lower court's ruling, that would wipe off more than a third of Kremikovtzi's 2.2 billion leva debt.

Dnevnik quoted Pravin Banker, who is advising a committee of bondholders, as saying that such a decision would also clear the way for creditors to get a voting majority, which would simplify negotiations with prospective investors.

But even in the case of such a setback, the Cabinet will remain largely in control of Kremikovtzi's future because the steelworks is so reliant on state-owned companies - gas distribution firm Bulgargaz, power grid NEK and railways BDZ.