BMB Munai, Inc. Announces Note Restructure

ALMATY, Kazakhstan, March 8, 2011 /PRNewswire/ -- BMB Munai, Inc. (NYSE Amex: KAZ) announced today that it has restructured its outstanding U.S. $60 million aggregate principal amount of 9.0% Convertible Senior Notes due 2012 (the "Notes").  In connection with the restructure (the "Note Restructure"), the Company entered into, among other agreements, Supplemental Indenture No. 6, dated March 4, 2011, between the Company and The Bank of New York Mellon, as trustee ("Supplemental Indenture No. 6"), including an Amended and Restated Indenture, dated as of March 4, 2011, between the Company and the trustee (the "Restated Indenture").

Pursuant to the Note Restructure, the Company, among other things, (i) increased the coupon rate of the Notes from 9.0% to 10.75%, (ii) made a $1.0 million cash payment to holders of the Notes, (iii) increased the aggregate principal amount of the Notes from $60.0 million to $61.4 million, (iv) extended the maturity date from July 13, 2012 to July 13, 2013, (v) granted the holders of the Notes a new put option, exercisable one year prior to the new maturity date, (vi) agreed to additional covenant restrictions, including a prohibition on paying dividends on shares of the Company's common stock and on the pledge or disposal of assets, (vii) agreed to semi-annual principal amortization payments of 30% of the Company's excess cash flow, (viii) agreed to allow the holders of the Notes to appoint a member to the board of the directors of the Company and the board of directors or similar body of Emir Oil LLP, the Company's wholly-owned subsidiary, and (ix) entered into a new Investors Rights Agreements, dated as of March 4, 2011, with the holders of the Notes and other parties (the "Rights Agreement").

In connection with the Note Restructure, the holders of the Notes approved the sale of Emir Oil LLP ("Emir Oil"), the Company's wholly-owned operating subsidiary, to Palaeontol B. V. (the "Buyer"), a subsidiary of MIE Holdings Corporation ("MIE"), pursuant to the Participation Interest Purchase Agreement dated February 14, 2011 among the Company, the Buyer and MIE. If the sale of Emir Oil is consummated, the Company will be required to redeem the Notes out of the sale proceeds.  

Subject to approval of the Company's common stockholders, the Note Restructure will also include a reduction of the conversion price of the Notes from $7.2094 per share to $2.00 per share with a corresponding reduction in the minimum conversion price from a floor of $6.95 per share to $1.00 per share (the "Conversion Price Reduction").  The Conversion Price Reduction may also be subject to regulatory approval of the Kazakhstan Ministry of Oil and Gas.    

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 Supplemental Indenture No. 6, the Restated Indenture, the Rights Agreement and the Note Restructuring Agreement, dated as of March 4, 2011, between the Company and the holders of the Notes.  The proxy statement the Company plans to file with the SEC and mail to its common stockholders will contain information about the Company, the Note Restructure, including the Conversion Price Reduction, the sale of Emir Oil, 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 CONVERSION PRICE REDUCTION.  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 Conversion Price Reduction.  Information concerning the Company's directors and executive officers 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 participants in the solicitation of proxies in connection with the Conversion Price Reduction 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.

Cautionary Note Regarding Forward-Looking Statements

This release contains "forward-looking" statements regarding the filing of a current report on Form 8-K and a proxy statement, the delivery of a proxy statement to the Company's common stockholders, the solicitation of proxies in connection with the Conversion Price Reduction, and the sale of Emir Oil.  All such forward-looking statements are subject to uncertainty and changes in circumstances.  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 the Company to complete the contemplated SEC filings and solicitation of proxies or the failure to consummate the sale of Emir Oil.  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.