Ukrainian tycoon Konstantin Zhevago was busy buying out bonds issued by Bulgaria's Kremikovtzi steelworks, a committee that jointly owns more than half of Kremikovtzi's bonds said, as quoted by Dnevnik daily on March 21.

Contacted by the daily, Bulgarian Economy and Energy Minister Petar Dimitrov confirmed the news.

The committee saw Zhevago's offensive as an attempt to put pressure on the government and avert a potential bidding war with the world's largest steel producer Arcelor Mittal, majority-owned by Lakshmi Mittal, the elder brother of Kremikovtzi's incumbent majority shareholder Pramod Mittal.

Dimitrov said the Cabinet was ready to co-operate with anyone who owned more than 50 per cent of Kremikovtzi's bonds, but added that neither the bondholder committee, nor Zhevago reached that threshold just yet.

According to the committee, which is formed by the five biggest bondholders, Arcelor Mittal is the sole bidder ready to pay out the full nominal value of the bonds and also cover the steel mill's liabilities. Zhevago, for his part, would look to cut a deal at which he would pay out only a smaller percentage of the nominal value, Dnevnik said.

The Cabinet, which owns 25 per cent in the steelworks, 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.