Pramod Mittal, the majority owner of Bulgaria's Kremikovtzi steel mill, had 45 days to come up with the principal on the seven-year bond he issued in 2006, as well as overdue interest payments, or surrender his 71 per cent stake in the steelworks, Dnevnik daily reported on April 1.

The bond issue uses Mittal's stake in Kremikovtzi and some of the steel mill's key assets as collateral. The news came from an institutional investor who owns a small amount of bonds, but was then confirmed for Dnevnik by the Kremikovtzi press service.

Bondholders believe Mittal is on the verge of losing the race against time to secure the sale of his stake to a strategic investor before he loses control of the company. Investors were also sceptical Mittal's Global Steel would manage to make the next coupon payment, due in May, the daily claimed.

Should Kremikovtzi or Global Steel run late on any payments, the bondholders have the right to demand payment of 101 per cent of the principal of the issue, which is 325 million euro, according to the issue prospectus, as quoted by Dnevnik.

Bondholders would look first to strategic investors, who would pay the amount in full, with Pramod's elder brother Lakshmi Mittal reportedly the only one able and willing to do. His main rival, Ukrainian billionaire Konstantin Zhevago, is rumoured to have accumulated up to 20 per cent of the bonds, which last traded at 60 per cent of their nominal value, in a bid to swing the scales in his favour.

Should the bondholders fail to find an investor that is ready to meet their demands, they were ready to liquidate the assets of the steel mill to recover their money.

Bulgaria's Economy and Energy Ministry, which owns 25 per cent in Kremikovtzi, told Dnevnik that it would back any move on behalf of the bondholders that would keep the steelworks operational, re-iterating its position that liquidation was not an option the Government was ready to accept.