Nationalisation has been offered as the latest rescue alternative for debt-laden steel mill Kremikovtzi. Investment banker Pravin Banker, an expert in emerging markets and troubled steelmakers' recovery, has come up with an action plan for Kremikovtzi, which sees the state as its sole shareholder, safeguards it from European Union sanctions and curbs extended bankruptcy proceedings.
Banker has laid down his proposal in a letter to the Bulgarian Government, a copy of which has reached Dnevnik daily.
The Government should become the sole shareholder of the mill until Kremikovtzi’s recovery process is complete, the letter of Banker reads. It should single-handedly seek for a state-guaranteed loan of 350 million euro, which would finance the mill’s environmental and investment programmes.
The state, as the lead creditor of Kremikovtzi, should take the initiative and draft a restructuring plan of its own. As cornerstones of the plan, Banker sees recapitalisation for the mill and the subsequent signing of a three-year management agreement with a reputable strategic investor. The investor should also be given the option to buy the mill at a time it considers opportune.
The state should choose the investor in an open procedure and among companies with minimum annual output of 15 million tonnes of steel a year. This eligibility criterion will sift dodgy companies from the procedure. Banker sees the value of the management agreement at 150 million euro, a sum that should immediately be re-invested into the plant.
According to Banker, Kremikovtzi should be delisted in a process which satisfies the claims of all minority shareholders. This process, alongside other aspects of Kremikovtzi’s recovery, should be overseen by a new supervisory board.
In regard to Kremikovtzi’s debts, all proven liabilities should be restructured into a new seven-year bond issue with an interest rate of seven per cent, the letter reads.
On September 27, Kremikovtzi’s creditors picked two trustees to run the ailing mill. Tsvetan Bankov and Ani Milenkova will be in charge of the mill’s operations until it emerges from bankruptcy proceedings.
Banker, the owner of Financial Network financial bank, is reputed for his expertise in bad debts management. His policy for investment in emerging markets has been taken up by corporations such as Elly Lilly, Bank of America, Mellon Bank, Societe Generale, Kraft and GM.
