Bulgaria Ministers Write off Crippled Steel Giant Kremikovtzi

Key Bulgarian Ministers have made it clear that bankrupt steel-making giant Kremikovtzi would most likely be liquidated.

80% of Kremikovtzi’s creditors have failed on Wednesday to approve an action plan to save the steel-maker, presented by its administration syndicate.

Minister of Economy, Energy and Tourism Traicho Traikov told the Council of Ministers that is was up to Tsvetan Bankov, company administrator in bankruptcy to present the plan in court, and for the court to decide on it.

“If there is to be a liquidation, that is the more usual way,” added Traikov. Two days ago he had called the steel-maker a “fake industrial entity” and stated that the only real alternative for the company was liquidation.

Minister of Environment and Waters, Nona Karadjova, expressed her own concerns.

“We did not find even one line in the Kremikovtsi resuscitation plan on measures for adapting to ecological norms,” she stated.

The second and third stages of this plan envisaged the opening of a blast-furnace and coke production plant, which would take years, with a huge investment required to purify the environment.

“There are no measures for harmonizing present production with contemporary requirements,” she said, adding that the introduction of new phases would from now on be regarded as new productions, and not as old installations.

She added that there was no time for the old installations to be adapted in compliance with EU ecological requirements.

"The plan is illegal", concluded Karadjova.

Finance Minister Dimeon Djankov stated that, in the plan for resuscitation of production at Kremikovtzi, there was an idea to prolong all public subsidies. “This idea is not good - especially in a crisis,” he commented.

Late Tuesday, the Tsvetan Bankov syndicate announced that NEK, the largest creditor, has given its assent for the capitalization of the factory's debts to it (their transformation into shares), and that the company would then own 59 726 629 shares each of BGN 1 nominal value.

The deadline for creditors’ expressions of intent concerning the resuscitation plan expired last Monday, but negotiations have since continued. Creditors and government have struggled unsuccessfully for several months to reach agreement on a plan to salvage the plant.

Kremikovtzi, Bulgaria’s biggest steel-plant, situated on the outskirts of capital Sofia, has suffered massive bankruptcy and loss of production. Workers have yet to receive BGN 56 M in unpaid salaries. Some 3 000 employees have been dismissed or have left the company, with some 3 170 staff still on the books.