Mittal swoop on brotherís steel plant
Monday, 26 May 2008

The Sunday Times

LAKSHMI MITTAL, Britain’s richest man, has advanced an emergency €30m (£24m) loan to a cash-strapped Bulgarian steel plant controlled by his brother Pramod.

The loan was made by Arcelor Mittal, the world’s largest steel group, where Lakshmi Mittal is chief executive and, with his family, controlling shareholder.

Arcelor Mittal wants to buy Kremikovtzi, the Bulgarian operation, and recently submitted a formal takeover offer. Sources close to Arcelor Mittal said the loan had been made in order to prevent the plant having to stop operations. Stopping and restarting steel mills – in particular blast furnaces – can be ruinously expensive.

Kremikovtzi was bought by Global Steel Holdings, a company controlled by Pramod, Lakshmi’s younger brother, three years ago. It has run out of cash.

The plant’s future is likely to be decided over the next few weeks by bond holders, other creditors and liquidators appointed by the Bulgarian authorities.

“It is a very complicated situation,” said one source close to the talks.

Arcelor Mittal has offered to pay off creditors and invest more than $150m (£76m) in the steel works. It is tipped as the likely winning bidder, but faces competition from Konstantin Zhevago, the Ukrainian billionaire behind Ferrexpo, the iron-ore producer that listed in London last year and is now a member of the FTSE 100.

On Friday Zhevago’s representatives said he planned to invest as much as $650m in Kremikovtzi if he took over. Severstal, the Russian group, has paid $37.5m for a controlling stake in a Liberian iron-ore prospect held by Mano River Resources, a mining group listed on the Alternative Investment Market.

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