Bulgaria Bankrupt Steel Mill New Auction Due on Nov 5

Business » INDUSTRY | October 6, 2010, Wednesday // 17:22
Bulgaria: Bulgaria Bankrupt Steel Mill New Auction Due on Nov 5

The second auction of bankrupt steel giant Kremikovtzi, considered the pride of the communist-era industry in Bulgaria, will take place on November 5, the factory's receiver announced.

Unlike the first closed-bid auction, which failed in the middle of September, the second auction will be with direct bidding. The starting price will be BGN 452 414 008, down by 20% over the initial tag. A 10% deposit is to be paid in advance. The bidder with the highest offer will be selected for buyer.

"I am certain that Kremikovtzi's assets will be sold and its creditors will be redeemed," Tsvetan Bankov said.

According to him the rail transport network and the electricity and natural gas distribution grids on the site of the plant are its biggest asset and should draw investors now that the price is lower.

The first closed-bid auction of Kremikovtzi failed to attract any bidders in the middle of September. It started at BGN 565 517 510, which according to trade unions and analysts is far below the market price. Prospective investors were invited to deliver sealed bids between noon and 1 p.m. on September 13, with a 10% deposit to be paid in advance, but no one turned up.

The site and assets of the struggling company, built in the 1960s, were offered for sale four months after the behemoth was sent into liquidation, its businesses -  wound up and its assets – offloaded.

Last year the smelter shut down some of its furnaces due to lack of raw materials after Ukrainian tycoon Konstyantin Zhevago cancelled a deal with the plant.

It was previously owned by Pramod Mittal, the younger brother of ArcelorMittal Chief Executive Officer Lakshmi Mittal.

The auction comes nearly a year after the majority of creditors of the troubled steel-maker rejected the rescue plan for the struggling company, while workers staged numerous rallies to call on the state to approve the recovery plan and bring to justice those, who have allegedly siphoned the company.

The sprawling communist-era behemoth near Sofia was declared bankrupt end of May and cleared for liquidation in June, after years of struggle with dire economic conditions, and multiple controversies about mismanagement and financial draining. In a high profile case, Alexander Tomov, former CEO of Kremikovtzi and Bulgarian football great CSKA, is currently facing trial.

The total debts of Bulgaria's former largest steel-maker amount to BGN 1,9 B, whereas the market value of all of its assets has been estimated at BGN 837 M.

Kremikovtzi, one of Bulgaria's biggest companies, provided jobs for over 5 000 people and its future was a politically sensitive issue ahead of the general elections last summer.

Different views about the future of Kremikovtzi site have been recently discussed by the Bulgarian public and authorities, including a possible retainment of the operating mill, creating a museum, a residential neighborhood and a new industrial park.

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Tags: Tsvetan Bankov, sofia, Alexander Tomov, Traicho Traikov, Kremikovtsi, Kremikovtzi, ArcelorMittal, closed-bid auction, direct bidding
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