Arcelor Mittal's L N Mittal has intensified his efforts to gain control over Global Steel Holdings Ltd's ailing Kremikovtzi steel mill in Bulgaria, run by his youngest brother, Pramod Mittal.

The mill faces the prospects of renationalisation by the Bulgarian government due to persistent labour unrest.

L N Mittal has written to the Bulgarian cabinet, pledging to restructure the mill and absorbing Kremikovtzi's outstanding liabilities of approximately around $1 billion.

Mittal is said too have assured a restructuring of the €325 million-bond and the state loan, settle late payments for taxes, social security contributions and other debts owed by Kremikovtzi.

Global Steel Holdings (GSH) has a majority stake in the ailing Bulagarian steel mill. A Global Steel spokesman said it had retained Merril Lynch to arrange for a strategic partner to join Global Steel in reviving Kremikovtzi, which was facing raw material shortage and other problems.

Ukraine's economy and energy minister Petar Dimitrov was quoted in a Bulgariqan paper as saying, Mittal had promised to improve the results of company in compliance with all environmental legislation at local, regional and international levels.

The daily said that according Dimitrov the government would not sell its entire 25-per cent stake and the involvement of the state in the takeover negotiations only referred to the environmental programme and viability of the proposed modernisation plans. 

The cabinet is reported to have endorsed Kremikovtzi's decision to issue the bonds in 2006, offering financial guarantees that it would be paid out, but it never had a say on how the proceeds bond were spent, which is why prosecutors were now investigating the steel mill, Dimitrov said.

Others in the fray to acquire the Bulgarian steel mill include Ukranian businessmen Konstantial Zhevago, who owns London-listed iron ore producer Ferrexpo and has started buying out bonds issued by Kremikovtzi; Rinat Akhmetov, another Ukranian tycoon, besides Turkey's Erdemir.

Zhevago's purchase offensive is being as an attempt to put pressure on the government and avert a potential bidding war with ArcelorMittal, which is majority-owned by Mittal.

The daily quoted Dimitrov as saying the cabinet was ready to co-operate with anyone who owned over 50 per cent of Kremikovtzi's bonds, but added that neither the bondholder committee, nor Zhevago had reached that threshold as yet.

According to the committee, formed by the five biggest bondholders, ArcelorMittal is the sole bidder willing to pay the full nominal value of the bonds and also cover the steel mill's liabilities.

Zhevago is said to be anxious to work out a deal where he would pay only a smaller percentage of the nominal value, another Bulgarian daily said.