Bulgarias Largest Steel Plant Kremikovtzi Contracts Output

Kremikovtzi, Bulgaria's largest steel-maker, cut down production significantly at the end of 2007, the company says in a report to the holders of bonds, secured with some of the plant's assets.

The 325-million euro seven-year bond issue was drawn out in early 2006 with an annual coupon of 12 per cent.

The bond-holders and the majority owner, Indian tycoon Pramod Mittal, had their regular conference call on February 12 to keep investors posted about the plant's current performance.

Frequent maintenance interruptions and the lack of working capital for the purchase of input materials are the main reasons for the negative output, Kremikovtzi officials reported.

Many of Mittal's steel companies are facing difficulties at the moment, representatives of an international bank told Dnevnik daily on condition of anonymity. They pointed to factories in Nigeria and the Philippines where wages' arrears date back months and other payments have also failed to meet deadlines. Their poor performance is explained through mismanagement and also the difficulties faced by Pramod Mittal himself.

Sources told Dnevnik that sale talks with Ukrainian billionaire Konstantin Zhevago fell through after he offered Mittal only 20 million euro for the plant.

In related news, Kremikovtzi said it has started to make payments to railway carrier BDZ.

In an official press release, the steel maker said the two sides had agreed a repayment mechanism for the settlement of more than 50 per cent of outstanding and acknowledged shipping bills.propertywisebulgaria.com