Банкеръ Weekly



Finmetals - majority owner of Kremikovtsi - has finally started negotiations with the Italian company Marcegaglia for the sale of half of its package of shares (35.5 per cent) in the iron and steel works. The bargaining began at a meeting between representatives of Kremikovtsi, Marcegaglia, the Swiss bank UBS, and UniCredito Italiano. The two financial institutions take part in the negotiations as mediators. UniCredito represent's the Italians' interests, and UBS has been picked up to represent the Bulgarian company. Kremikovtsi's Executive Director Valentin Zahariev said that the concrete financial parameters of the deal would be ready in the autumn. The Italian company showed interest towards the Bulgarian iron and steel works during its divestment in June 1999. The privatisation contract for the purchase of 71% of Kremikovtsi's capital by Finmetals (formerly Daru Metals) includes a clause, entitling Marcegaglia to acquire half of the buyer's stake. Then, however, only a 5-year contract for export of steel was sigend with the Italians. According to Alexander Tomov, Deputy Chairman of Kremikovtsi's Supervisory Board, the operation of the enterprise has considerably improved recently. Kremikovtsi reported a loss of BGN10MN for 2002, but it was BGN50MN for the first half of the year alone. In Mr. Tomov's words, the iron and steel works is currently operating at a profit, and the reported negative results are due to losses in past periods. As a result of bad services on the part of the Bulgarian State Railways (BDZ) missed benefits for December 2002 and January 2003 alone totaled some BGN16MN, Mr. Zahariev pointed out. Kremikovtsi needs 200 waggons monthly for transporting its output, but BDZ supplies 120 waggons only. Meanwhile, the repair of third blast furnace began, which is part of the implementation of the updated programme for bringing Kremikovtsi's operation in compliance with European ecology standards. The Ministry of Environment and Waters approved that programme in February 2003 and it will cost BGN297.7MN.On March 31 began the elimination of damages, caused by operation in the past. Two buildings of the coke plant, decommissioned back in 1987, were blown up. The clearing of the area will cost Kremikovtsi BGN3MN. Another BGN5.8MN has been earmarked for an installation for processing metals scraps. The Ministry of Environment and Waters will grant Kremikovtsi USD15MN for complete elimination of the ecology damages. The money has been released by the World Bank under the environmental support agreement. The remaining BGN20MN which is necessary for the programme's implementation should be provided by the enterprise itself.

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