Montenegro sells bankrupt steel mill to Turkish firm

Mon Apr 30, 2012 10:14am EDT

* Toscelik pays 15.1 mln euros for Zeljezara Niksic

* Two previous tenders failed

* Steel mill went bankrupt in 2011

PODGORICA, April 30 (Reuters) - Montenegro has sold its bankrupt Zeljezara Niksic steel mill to a Turkish metals company for 15.1 million euros ($20.02 million), which will help the tiny Adriatic country to reduce its debt burden.

Turykey's Toscelik Profil ve Sac Endustrisi AS has bought the smelter, which is in the northern city of Niksic, the commerce court said on Monday. The mill was declared bankrupt last year with debts of some 193 million euros ($266.3 million).

Two previous tenders for the company failed to attract any bidders.

The Montenegro government this year took on debts of 32 million euros from the steel mill and another 132 million euros from the country's aluminium producer Kombinat Aluminijuma Podgorica (KAP).

Montenegro has equal shares in a 58 percent stake in the aluminium plant with the EN+ group of Russian billionaire Oleg Deripaska.

Taking on the debts from these two companies meant Montenegro, a country of 680,000 people, had to revise down its growth forecast last week from 2 percent to 0.5 percent in 2012.

British-based MN Specialty Steels Limited had paid 5.2 million euros in 2006 for a 66.7 percent stake in the then state-run Zeljezara Niksic. MNSS, a Dutch investment vehicle of Ethemba Capital, a private equity fund, acquired a majority stake three years later, before Zeljezara went bankrupt in 2011. ($1 = 0.7542 euros) (Reporting by Petar Komnenic.; Writing by Aleksandar Vasovic. Editing by Jane Merriman)