September 08, 2008

ArcelorMittal ready to pay up to USD 700 million for Kremikovtzi

Dnevnik daily quoting a bondholder of the steel mill reported that ArcelorMittal is prepared to pay between USD 400 million and USD 700 million for a majority stake in Bulgaria’s ailing steel mill Kremikovtzi.

The paper said that the exact figure would depend on the amount of hidden debts Kremikovtzi has. Such obligations would include the costs of the viability and environmental program of the steelworks, which the mill has to carry out in order to comply with mandatory European Union environmental regulations. If it does not meet the EU requirements, Kremikovtzi faces closure.

The newspaper also said that ArcelorMittal is also ready to invest USD 500 to USD 650 million in operating funds and capital expenditures within a five year period. This investment backlog is set to be sufficient to upgrade the mill to the standards of the steel maker’s other production facilities.

The acquisition price is enough to pay off what the mill owes to bondholders the full principal of the bond and interest, worth EUR 347 million but not all of Kremikovtzi's other debt, the bondholders’ committee said, as quoted by Dnevnik. Those debts are estimated at an extra USD 300 million.