Ukrainian Tycoon Ready to Provide Capital for Bulgaria Steel-maker

Business | January 31, 2008, Thursday // 00:00| Views: | Comments: 0
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Bulgaria: Ukrainian Tycoon Ready to Provide Capital for Bulgaria Steel-maker Ukrainian Tycoon Zhevago enhanced his bid for steel mill Kremikovtzi with his readiness to provide badly needed funds. Photo by Yuliana Nikolova (Sofia Photo Agency)

The Ukrainian billionaire Konstantyn Zhevago, who is the main bidder for the Kremikovtzi steel mill, will secure EUR 80 M working capital for the troubled plant.

This was announced today by PM Sergey Stanishev who met with Zhevago yesterday to discuss his bid for Kremikovtzi. Stanishev also said that he had received a letter on Thursday from the Ukrainian businessman confirming his continued interest in the purchase of the steel-maker.

"The state is a minority holder with a stake of 25%, and doesn't participate in the operational management but we are not indifferent to the fate of Kremikovtzi", the prime minister stated.

In his words, in June 2007 he and the former Minister of Economy and Energy Rumen Ovcharov demanded explanation from the management of the plant because of its failure to execute the pre-approved production, environmental, and social programs.

The government insisted that the owner of the plant, the Indian tycoon Pramod Mital, should come to Sofia, and present his vision for the sale of Kremikovtzi. Stanishev also insisted that he met personally all bidders for the steel-maker. The cabinet has pledged to support any serious investor who is able to fulfill the assumed responsibilities.

The 34-year-old Zhevago, whose fortune is estimated at USD 1.5 B, is in charge of Ukraine's Finance and Credits Group, and owns the world's fourth largest iron ore deposit, as well as the domestic truck maker AvtoKraz.

Bulgaria sold 71% stake in Kremikovtzi to the Bulgarian Finmetals Group in 1999 for a token USD 1 along with debts to the state and suppliers standing at USD 420 M.

In mid-2005, Global Steel Holding Ltd. (GSHL) bought Finmetals and took control of the mill, which employs 8,000.

GSHL is part of Ispat Industries, and is owned by Pramod and Vinod Mittal, younger brothers and competitors of steel magnate Lakshmi Mittal.

The company put forward but failed to implement an ambitious turnaround plan, which aimed to upgrade it to EU environmental standards, improve productivity, quality and margins.
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