Calcutta, May 14: It’s now official. Lakshmi Niwas Mittal has stepped in to save his brother Pramod Mittal’s troubled asset in Bulgaria by making a formal bid.
Sources said Merrill Lynch, which is the consultant for the sale of Kremikovtzi, Bulgaria’s biggest steel company, had received a formal bid from ArcelorMittal and submitted the offer to the economics and energy ministry of the east European country.
Pramod Mittal’s Global Steel Holding, which owns Ispat Industries in India, bought a 71 per cent stake in Kremikovtzi in 2005.
Though the exact bid amount is not known, LNM wants to buy his brother’s entire 71 per cent share.
The Bulgarian government holds a 25 per cent stake in Kremikovtzi.
However, Lakshmi Mittal is not the only one eyeing this troubled asset saddled with debt and facing workers’ unrest and stringent EU environmental norms.
Ukrainian billionaire Kostyantin Zhevago, who owns 73 per cent in London-listed iron ore firm Ferrexpo, is also likely to submit a bid.
Earlier reports suggested that LNM might be ready to pay $400-700 million for the stake and another $500-650 million in operating funds and capital expenditure within a five-year period.
This investment backlog is said to be sufficient to upgrade the mill.
If LNM clinches the deal, it will be the first publicly known business transaction between the brothers after LNM left India to create his empire in 1994.
While LNM has been focusing on international markets, brothers Pramod and Vinod concentrated on India.
The situation changed when Pramod Mittal ventured overseas, while LNM decided to invest $20 billion in two major plants in Jharkhand and Orissa.
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