ECONOMY

Bulgarian steel mill in talks with four bidders

SOFIA (Reuters) – Bulgaria’s largest flat steel mill Kremikovtzi announced yesterday it was in talks with four potential investors who are eying a stake in the firm, and said it hoped to sign a deal with one by the end of the year. The debt-ridden company, sold by the EU aspirant country for a dollar in 1999 to Bulgarian Finmetals Holding, returned to profit last year for the first time since the sale. Finmetals is now considering the sale of all or part of its 71 percent stake to an investor through a cash sale or share-swap, Kremikovtzi Executive Director Valentin Zahariev told reporters. «Three of the strategic investors are European companies and one is a US company. Two of them have already undertaken due diligence in the steel mill,» Zahariev said. Kremikovtzi’s production of raw steel rose by 20 percent to 1.66 million tons in 2003 from the previous year. It posted a net profit of 120 million leva ($73.5 million), compared with a loss of 11 million leva in 2002, mainly due to a reappraisal of its assets. Its operating profit stood at 39 million leva, which Zahariev said will cover some of its 400-million-lev debt. Kremikovtzi said that under an agreement with the EU, which Bulgaria hopes to join in 2007, it would dismantle one of its three blast furnaces by June. It will also scrap three rolling units by the year of Bulgaria’s accession under the deal, which will limit Kremikovtzi’s capacity to compensate for state aid it received during the privatization process. Zahariev said the cuts will cost Kremikovtzi $340 million, but added that 2004 revenues should rise to 900 million leva, mainly due to higher steel prices and better market access, from 700 million last year. The plant currently produces around 2 percent of Bulgaria’s total GDP. It employs 8,000 people and exports the largest part of its output to the EU, US and China.