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Kremikovtzi Steel sells assets to Eltrade

Bulgaria – Bulgaria has sold the production assets of the bankrupt Kremikovtzi steel mill in a fourth auction after the initial asking price was cut by more than 40%.

Tsvetan Bankov, the factory’s receiver, told the Bloomberg news agency that the mill was sold to a new entity, Eltrade, for 316 million lev (EUR 162 million). Eltrade paid a 10% deposit up front and will pay the balance by April 18.

Mr Bankov said that the plant’s remaining assets, which include land, mines and 300 service apartments and are valued at about 300 million lev (EUR 153 million), were being sold at separate auctions.

A first tranche of production assets, including a rail transport network and the electricity and natural gas distribution grids serving the plant, were priced at BGL 565 million (EUR 289 million) and sold at auction last September. According to Bulgaria’s Trade Registry, Eltrade was registered as a metals trading firm in Sofia on March 8, 2011 with capital of 20,000 lev (EUR 10,226).

The company’s founder, Lachezar Varnadjiev, declined to comment on his plans for developing his acquisition. Consultant Krassen Stanchev, a former adviser to some of the Kremikovtzi bondholders, said: ‘This is good news for all involved. If properly managed, Kremikovtzi can generate net income of EUR 320 million a year for the next four years through scrap processing.’

The mill, built in the 1960s, was owned at one time by Pramod Mittal, the younger brother of ArcelorMittal CEO Lakshmi Mittal. It was placed in receivership in 2008 after failing to pay investors holding EUR 325 million of bonds. Coke and metal production ceased in May 2009.

Attempts to sell Kremikovtzi to ArcelorMittal and Ukrainian billionaire Kostyantin Zhevago three years ago failed, prompting the Sofia City Court to declare the facility bankrupt.

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