Ukrainian billionaire Konstantin Zhevago has acquired 20 per cent, amounting to 65 million euro, of the bonds of Kremikovtzi, the largest steel mill in Bulgaria.

Zhevago announced the deal to state representatives during an April 11 meeting immediately after the no-confidence vote in the Bulgarian Government, Bulgarian-language daily Standart reported on April 21.

Zhevago notified Prime Minister Sergei Stanishev, Minister of Economy and Energy Petar Dimitrova and Minister of Finance Plamen Oresharki by letter prior to the meeting. Zhevago declared his readiness to invest $100 million in Kremikovtzi. According to Standart, the state cannot support Zhevago’s plans financially because it does not own the steel factory. However, sources in London commented that the chances of Zhevago becoming the new owner of Kremikovtzi are quite high, Standart also said.

The second – more serious – bid for the local steel mill comes from ArcelorMittal, owned by Kremikovtzi’s current owner – and Pramod Mittal’s older brother – Lakshmi Mittal. Recent articles in the Bulgarian media reported that Pramod Mittal requested his brother’s help to solve the problems at Kremikovtzi.

Lakshmi Mittal has apparently considered renting out the steel mill so that management could avoid the clause that enables shareholders to retrieve their money in the event of a change of ownership, Standart reported. According to the London source, both Mittal and Zhevago were negotiating with bondholders not to start proceedings on the principle of the bond before any deal, and to desist from trying to seize control of the steel mill’s assets.

In an interview with French newspaper Les Echos, Lakshmi Mittal said on April 21: “We maintain very good family relationships but, in business, family ties cannot get in the way.” He said that in Kremikovtzi’s case, the bankers in charge of the cession approached ArcelorMittal. “If an opportunity is economically viable and there is potential synergy, the management is obliged to look at the file,” Lakshmi Mittal said.

“My family and I are committed to not interfere in the process. That is why the managing board nominated someone who is not a member of the family, Michel Wurth, to study the file. I will not involve myself in the process before the board gives its approval,” he said.

ArcelorMittal is the biggest world steel producer. Company representatives met Dimitrov on April 15 in Sofia. After the meeting, an ArcelorMittal representative said that the company’s management is aware of Kremikovtzi’s problems and is ready to start solving them, Bulgarian language daily Dnevnik reported. However, he did not reveal the extent of progress in negotiations over Kremikovtzi’s acquisition. Neither would he say whether ArcelorMittal would be the first bidder.

Meanwhile, a Cabinet representative said that negotiations were difficult and that a delay on reaching agreement over Kremikovtzi’s change of ownership was highly likely. A special announcement from the Ministry of Economy and Energy said that a possible alternative could involve renting out the steel mill for several months. During this time, the ownership change should be solved. A representative from one of the international banks, which own bonds in Kremikovtzi, said that the factory’s debts are obstructing such a deal.

Meanwhile, on April 21, Kremikovtzi’s employees staged new protests because their February salaries had been delayed. By April 18, 80 per cent of the wages had been paid but the process was too slow, a labour union representative said. Unions requested a meeting with the candidates for buying Kremikovtzi to negotiate labour conditions.