The former owner of Bulgaria’s troubled steel mill Kremikovtzi, Finmetals Holding, will be fined BGN 40 M for failing to execute its investment program as stipulated by the privatization contract.

This has been announced by Rusi Statkov, a member of the Supervisory Council of Bulgaria’s Agency for Post-privatization Control, as cited by the Trud Daily.

Statkov said the Sofia Appellate Court had ruled in favor of the suit filed by the Agency and Finmetals would have to pay BGN 40 M for failing to meet its privatization commitments to Kremikovtzi in 2002; several years later what once was Bulgaria’s largest steel factory went completely bankrupt and is about to be liquidated. The company can appeal the decision.

Finmetals Holding was owned by Bulgarian tycoon Valentin Zahariev. It bought 71% of Kremikovtzi from the Bulgarian government in 1999 for a token USD 1 along with debts to the state and suppliers standing at USD 420 M.

Under the privatization contract, it was supposed to invest USD 450 M in five years but little of this promise materialized. In mid-2005, Zahariev sold Finmetals Group to Pramod Mittal's Global Steel Holding Ltd.

The Agency for Post-privatization Control has filed ten suits against the former owner of Kremikovtzi. In 2009, it won the first case slapping a fine of BGN 30 M on Finmetals.

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