ALMATY, Kazakhstan,
Feb. 14, 2011 /PRNewswire/ -- BMB
Munai, Inc. (NYSE Amex: KAZ) (the "Company") today announced that
it has entered into a definitive purchase agreement to sell all of
its interest in its wholly-owned operating subsidiary, Emir Oil
LLP, to a subsidiary of MIE Holdings Corporation (HKEx: 1555).
The initial purchase price is $170
million, which is subject to various closing adjustments and
the deposit of $36 million in escrow
to be held for a period of twelve months following the closing for
indemnification purposes. In connection with the purchase, all
notes and sums owed by Emir Oil LLP to the Company will be
transferred to the purchaser. Upon consummation of the sale,
the Company will use a portion of the proceeds to repay the
Company's outstanding $60 million
convertible senior notes.
The Company intends to make an initial cash distribution to
stockholders in the estimated range of $1.04
to $1.10 per share upon the closing from the transaction
proceeds, after giving effect to the estimated closing adjustments
and escrow amount and the repayment of the convertible senior notes
and after providing for the payment of or reserve for other
anticipated liabilities and transaction costs. The mid-point
of the estimated initial distribution price range ($1.07) represents a premium of 19% over the
prior 30-day average trading price of the Company's common stock.
The Company intends to make a second distribution to
stockholders that could range up to approximately $0.30 per share following termination of the
escrow, subject to the availability of funds to be released from
the escrow, actual costs incurred and other factors.
The definitive purchase agreement was approved by the five
independent directors of the Company, based upon the recommendation
of an independent oversight committee of the board. UBS
Investment Bank advised the independent oversight committee in the
transaction.
Closing Conditions and Stockholder Approval
The transaction is subject to certain conditions, including
regulatory approvals and other customary closing conditions.
The transaction is also subject to approval by the
stockholders of the Company and the stockholders of MIE Holdings.
The Company expects to complete the closing in the third
quarter of calendar year 2011.
The transaction and certain aspects of the note restructuring
(described below) must be approved by a majority of the holders of
the Company's common stock. The Company expects to hold a
special meeting of stockholders and in connection therewith to mail
a proxy statement to its stockholders that will provide additional
information concerning the transaction, the definitive purchase
agreement and the note restructuring. Certain principals of the
Company, who collectively own approximately 24% of the Company's
outstanding shares of common stock, have agreed to vote their
shares in favor of the transaction at the stockholders'
meeting.
Information Regarding SEC Filings
The Company will file with the U.S. Securities and Exchange
Commission (SEC) a current report on Form 8-K, which will include
the definitive purchase agreement. The proxy statement that the
Company plans to file with the SEC and mail to stockholders will
contain information about the Company, the proposed sale and note
restructuring transactions and related matters. STOCKHOLDERS ARE
URGED TO READ THE PROXY STATEMENT CAREFULLY WHEN IT IS AVAILABLE,
AS IT WILL CONTAIN IMPORTANT INFORMATION THAT STOCKHOLDERS SHOULD
CONSIDER BEFORE MAKING A DECISION ABOUT THE PROPOSED TRANSACTIONS.
In addition to receiving the proxy statement from the Company by
mail, stockholders will be able to obtain the proxy statement, as
well as other filings containing information about the Company,
without charge, from the SEC's website at www.sec.gov or, without
charge, from the Company at its website at www.bmbmunai.com. This
announcement is not a solicitation of a proxy.
The Company and its directors and executive officers may be
deemed to be participants in the solicitation of proxies in
connection with the proposed transactions. Information
concerning the Company's participants is set forth in the Company's
annual report on Form 10-K for the year ended March 31, 2010, which was filed with the SEC on
June 24, 2010. Additional
information regarding the interests of the Company's directors and
executive officers in the solicitation of proxies in connection
with the proposed transactions will be included in the proxy
statement to be filed with the SEC. The Company's press releases
and other information about the Company are available on the
Company's website.
Note Restructuring
In connection with the definitive purchase agreement, the
Company obtained a waiver with respect to the Company's execution
of the purchase agreement from holders of the Company's outstanding
$60 million convertible senior notes.
The closing of the purchase agreement, however, remains
subject to approval by the noteholders. As previously
announced, the Company is restructuring the notes pursuant to which
the terms of the notes will be amended to, among other things, (i)
increase the coupon rate to 10.75%, (ii) require the Company to
make a $1.0 million cash payment
towards the principal balance of the notes, which will result in an
adjusted principal amount of $61.4
million after giving effect to the restructuring, (iii)
extend the maturity date to July 13,
2013, (iv) grant the noteholders a new put option,
exercisable one year prior to the new maturity date, (v) reduce the
conversion price of the notes to $2.00 per share, (vi) provide additional covenant
restrictions by the Company, including a prohibition on paying
dividends on shares of the Company's common stock and on the pledge
or disposal of assets, (vii) provide for semi-annual principal
amortization payments of 30% of the Company's excess cash flow, and
(viii) allow the noteholders to appoint a member to the board of
the directors of the Company and the board of directors or similar
body of Emir Oil. If the sale transaction is consummated, the
Company expects to redeem the notes.
Certain aspects of the note restructuring will be subject to
stockholder approval and may be subject to the regulatory approval
of the Kazakhstan Ministry of Oil & Gas. If such regulatory
approval is required and not obtained, the noteholders will have an
additional put option. The Company and the noteholders continue to
work toward definitive documents to restructure the notes upon the
terms disclosed above and upon other additional terms.
About MIE
MIE Holdings and its subsidiaries is one of the leading
independent upstream oil companies operating onshore in
the People's Republic of China
(PRC) as measured by gross production under production sharing
contracts. MIE Holdings operates the Daan, Moliqing and Miao
3 oilfields in the Songliao Basin, the PRC's most prolific
oil-producing basin, under three separate production sharing
contracts with PetroChina, the largest oil company in China. In addition, MIE Holdings pursues
other development and production opportunities in China, and exploration, development and
production opportunities internationally, both independently and in
partnership with other major and independent oil companies.
Cautionary Note Regarding Forward-Looking Statements
This release contains "forward-looking" statements regarding the
Company's proposed sale of Emir Oil LLP, the anticipated cash
distributions to stockholders, the amount of such distributions,
the closing of the transaction and the timing thereof, the filing
of various information with the SEC, and the restructuring of the
notes and the terms thereof. All such forward-looking
statements are subject to uncertainty and changes in circumstances,
and there is no assurance the sale transaction or the note
restructuring will be consummated. Moreover, no forward-looking
statements are guarantees of future results or performance and
involve risks, assumptions and uncertainties that could cause
actual events or results to differ materially from the events or
results described in, or anticipated by, the forward-looking
statements. Factors that could materially affect such
forward-looking statements include the failure of any one or more
of the closing conditions to the sale transaction, termination of
the definitive purchase agreement, and other economic, business and
regulatory risks and factors identified in the Company's periodic
reports filed with the SEC. All forward-looking statements
are made only as of the date of this release and the Company
assumes no obligation to update forward-looking statements to
reflect subsequent events or circumstances. Readers should
not place undue reliance on these forward-looking statements.
NYSE Amex has neither approved nor disapproved of the contents
of this press release.
SOURCE BMB Munai, Inc.