SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): February 23, 2011
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Item 1.01 Entry into a Material Definitive Agreement.
On February 23, 2011, BMB Munai, Inc. (the “Company”) entered into a Supplemental Indenture No. 5, dated as of February 23, 2011, between the Company and The Bank of New York Mellon, as trustee (“Supplemental Indenture No. 5”). Supplemental Indenture No. 5 amends and supplements the Indenture dated as of September 19, 2007 between the Company and The Bank of New York Mellon, as trustee, as previously amended by Supplemental Indenture No. 1, dated as of June 1, 2010, Supplemental Indenture No. 2, dated as of September 10, 2010, Supplemental Indenture No. 3, dated as of December 22, 2010 and Supplemental Indenture No. 4, dated as of January 26, 2011(the “Indenture”). The Indenture was entered into in connection with the U.S. $60,000,000 aggregate principal amount of 9.0% Convertible Senior Notes due 2012 (the “Notes”) issued by the Company in 2007. Supplemental Indenture No. 5 was entered into pursuant to ongoing negotiations between the Company and the holders of the Notes (the “Noteholders”) on terms and conditions for restructuring the Notes.
The Indenture provided for seven put dates that allow the Noteholders to redeem the Notes prior to their 2012 maturity date. The first six put dates passed unexercised. The seventh put date commenced on January 31, 2011 and expires on February 28, 2011. Supplemental Indenture No. 5 grants the Noteholders an eighth put date that commences on February 28, 2011 and expires on March 15, 2011. In exchange for the eighth put date, the Noteholders separately agreed they will not exercise their put options for the seventh put date and they will not exercise their put options for the eighth put date that would be effective prior to March 15, 2011; provided, however, the Noteholders may exercise such put options at any time prior to their respective expiration dates upon the occurrence of any of the following: (i) a default occurs under the Indenture excluding certain defaults that occurred prior to February 23, 2011, (ii) failure by the Company or any of its material subsidiaries to timely pay any Indebtedness (as defined in the Indenture) or any guarantee of any Indebtedness that exceeds U.S. $1,000,000, or any Indebtedness becomes due and payable prior to its stated maturity other than at the option of the Company or any of its material subsidiaries, or (iii) the Noteholders holding a majority in outstanding principal amount of the Notes provide notice to the Company and the other Noteholders that negotiations with respect to the restructuring of the Notes have terminated. Therefore, it is possible the Noteholders could exercise a put option with respect to the Notes prior to March 15, 2011 if any of the foregoing events occur.
Prior to entering into Supplemental Indenture No. 5, the Company was in default of certain covenants contained in Article 9 of the Indenture requiring the Company to maintain a minimum net debt to equity ratio and to comply with certain notice, delivery and other provisions. The Noteholders separately agreed to waive these defaults until the March 15, 2010, the eighth put date, with the understanding that such waiver shall not constitute a waiver of any default under the Indenture that remains ongoing as of March 15, 2011 or occurs after February 23, 2011. The Company currently believes it will not be able to remedy the net debt to equity ratio covenant by March 15, 2011 and, therefore, anticipates it will be in default under the Indenture at that time unless a future waiver is obtained from the Noteholders.
Although the Company and the Noteholders have reached an agreement in principle as to the general terms of the proposed restructure, there is no assurance the parties will enter into definitive agreements regarding the plan of restructure or that the parties will successfully close and consummate a plan of restructure regarding the Notes. Moreover, there is no assurance the Noteholders will provide any future waiver or any further extension of their redemption put rights under the Indenture.
The description of Supplemental Indenture No. 5 in this Current Report on Form 8-K is only a summary of that agreement and is qualified in its entirety by reference to the terms of Supplemental Indenture No. 5, a copy of which is attached as an exhibit to this Current Report on Form 8-K.
Item 8.01 Other Events.
On February 23, 2011 the Company issued a press release announcing that it had entered into Supplemental Indenture No. 5. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.
Item 9.01 Financial Statements and Exhibits.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.