Kremikovtzi Steel Mill, Icesave Claims, Takefuji: Bankruptcy
Bulgaria sold the production assets of the bankrupt Kremikovtzi AD (4KW) steel mill in a fourth auction after cutting their initial price by 44 percent to 316 million lev ($233.2 million).
The mill was placed in receivership in 2008 after failing to pay investors holding 325 million euros ($469 million) of bonds. Attempts to sell it to ArcelorMittal (MT) and Ukrainian billionaire Konstantin Zhevago three years ago failed, prompting the Sofia City Court to declare it bankrupt.
The mill was sold to Eltrade Company EOOD, Tsvetan Bankov, the factory’s receiver, told reporters in Sofia today. Eltrade paid a 31 million lev deposit before the auction and pay the balance of the full price by April 18, Bankov said.
“This is good news for all involved,” Krassen Stanchev, chief executive officer of the KC2 consultancy firm and a former adviser for some of the bondholders, said by phone. “If properly managed, Kremikovtzi can generate net income of some 20 million euros a year for the next four years by processing scrap.”
Eltrade was registered as a metals trading firm in Sofia on March 8 with capital of 20,000 lev, according to Bulgaria’s Trade Registry. The company’s founder, Lachezar Varnadjiev, 26, declined to comment on how he is going to develop the assets.
Icelanders Reject Depositors Bill, Forcing Yearlong Fight
Icelanders rejected a depositor claims accord with the U.K. and Netherlands, forcing an international court battle that the island’s government said will probably last a year.
A final count showed 59.7 percent of voters said no to the so-called Icesave agreement, while 40.1 percent said yes, with voter turnout estimated at 75 percent, the Reykjavik-based National Electorate Commission said on April 10.
“I fear a court case very much,” Prime Minister Johanna Sigurdardottir said in an interview with broadcaster RUV after the first results were published. “We will, of course, defend Iceland’s interests vigorously in this matter.”
The government had hoped a deal would restore investor and diplomatic relations and end the financial isolation that has stalled Iceland’s revival from its 2008 banking collapse. The failure of Landsbanki Islands hf, which offered the high- yielding Icesave accounts, threatened to leave 350,000 British and Dutch depositors in the lurch. They were repaid by their governments, which have turned to Iceland for compensation.
Britain is lending Iceland 2.35 billion pounds ($3.83 billion) to help it repay the depositor losses, while the Netherlands is lending 1.3 billion euros ($1.9 billion).
The latest bill, which set the terms for covering the depositor losses, was rejected by President Olafur R. Grimsson in February after being passed by a two-thirds majority in parliament. The government had reached an agreement with the U.K. and Netherlands in December.
Iceland, which has been rated junk by Fitch Ratings since Grimsson’s previous Icesave rejection in January 2010, also faces a rating cut to non-investment grade from Moody’s Investors Service, the company said Feb. 23.
Iceland’s negotiating committee in December estimated the latest Icesave accord would cost the state about 47 billion kronur ($417 million), while the remainder will be covered by Landsbanki’s assets. On March 2, it estimated the cost to the state at 32 billion kronur, less than a third of the Icesave accord rejected by 93 percent of voters a year ago.
The latest estimates of Landsbanki’s assets “indicate that the estate will be able to pay over 90 percent of claims for deposits,” the government said in a statement. Some estimates even put the coverage ratio at 100 percent, it said.
ECM Real Estate Pares Loss After Report Insolvency Case Ditched
ECM Real Estate Investments AG (ECM) pared its decline after CTK newswire reported today that a Prague court rejected an insolvency proposal filed earlier against the Czech property developer by Ceska Sporitelna AS.
Sazka Loses Clients as Czech Lottery Struggles to Pay, MFD Says
Sazka received 12 million koruna ($712,000) in wagers for its Nedelni Sportka game on April 10, down from more than 50 million koruna for the Sunday game at the end of last year, the Prague-based newspaper said on April 12, citing numbers provided by the company.
Bankrupt Takefuji Says Korea’s A&P Is Preferred Bidder
Takefuji’s court-appointed lawyers will start talks toward asking the Seoul-based company to become the lender’s sponsor by the end of the month, the Tokyo-based company said in a statement on April 11.
Takefuji filed for bankruptcy protection in September with 434 billion yen ($5.2 billion) in debt, becoming Japan’s biggest casualty of a four-year crackdown on coercive lending. Acquiring Takefuji would help A&P expand beyond South Korea.
A&P Financial obtained the rights for Takefuji, Choi Woo Gun, a spokesman for the South Korean company, confirmed by phone. Choi declined to comment on the price or other terms, citing a confidential agreement.
Along with A&P, J Trust Co., TPG Capital and two other companies were vying for Takefuji. J Trust, a Japanese financial services company, last week withdrew its 31 billion yen bid, saying the process was unfair.
U.K.’s ‘Moderate’ Bank Report Calls for Extra Capital, Sales
The Independent Commission on Banking recommended the U.K.’s biggest banks should boost capital, implement plans for an orderly bankruptcy and erect fire breaks around their consumer units in what it called “moderate” proposals.
The commission acknowledged the concerns of some banks, including Barclays Plc (BARC), by shying away from an enforced separation of investment banking units in its 208-page interim report published on April 11. The largest banks should have a core Tier 1 capital ratio, a measure of financial strength, of at least 10 percent, the commission said. It also called for Lloyds Banking Group Plc (LLOY), the country’s biggest mortgage lender, to divest “substantially” more branches than the 600 already being offered for sale to meet European Union state aid rules.
John Vickers, 52, chairman of the commission and former Bank of England chief economist, was asked by the government last year to make recommendations to boost stability and competition in the British banking industry after the taxpayer spent 65.8 billion pounds ($107 billion) rescuing Royal Bank of Scotland Group Plc (RBS) and Lloyds during the financial crisis. The April 11 publication opens the way to five months of lobbying before the final report is handed to Chancellor of the Exchequer George Osborne and Business Secretary Vince Cable in September.
Vickers recommended banks put their consumer operations into a separately capitalized subsidiary within the holding company to protect depositors and enhance stability. Such a structure would be “less costly” for banks than full separation, the report said. In the event of a bank collapse the “vital” consumer banking operations could be kept running while the investment banking activities are able to fail safely, the report said.
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