3rd Auction for Bulgarian Steel Behemoth Scheduled after 2 Failures

The receiver of the bankrupt Bulgarian steel factory Kremikovtzi has scheduled February 7 as the date for the third attempt to sell off the failed behemoth's assets.

Two prior auctions were held over the fall, but failed because actually no one turned out to bid for Kremikovtzi, which is considered the pride of communist-era industry in Bulgaria.

Unlike the first closed-bid auction, the second was with direct bidding. The starting price was BGN 452 414 008, down by 20% over the initial tag at the first tender, which also failed due to lack of prospective buyers.

For February's bid, the initial price will drop even further (with 31% from the initial one), and will set at BGN 395 M.

The factory's receiver Tsvetan Bankov has expressed confidence that Kremikovtzi's assets will be eventually sold and its creditors will be redeemed.

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 once the price is lowered even further. Bankov attributed the failure of November 5 auction to what he called "too high a price".

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.