EXHIBIT 99.2
Unaudited Pro Forma Condensed Consolidated Financial Information
The following unaudited pro forma condensed consolidated financial statements have been prepared from the Company’s historical consolidated financial statements and give effect to the Sale. The unaudited pro forma condensed consolidated statements of operations for the three months ended June 30, 2011 and the year ended March 31, 2011 reflect adjustments as if the Sale had occurred on the first day of each period, respectively. The unaudited pro forma condensed consolidated balance sheet as of June 30, 2011 reflects adjustments as if the Sale had occurred on June 30, 2011.
Pro forma information is intended to provide investors with information about the continuing impact of a transaction by showing how a specific transaction might have affected historical financial statements, illustrating the scope of the change in the historical financial position and results of operations. The adjustments made to historical financial information give effect to events that are directly attributable to the Sale, and expected to have a continuing impact.
The unaudited pro forma condensed consolidated financial statements set forth below are not fact and there can be no assurance that our actual results will not differ significantly from those set forth below or that the impact of the Sale will not differ significantly from those presented below. Accordingly, the unaudited pro forma condensed consolidated financial statements are presented for illustrative purposes only and do not purport to represent, and are not necessarily indicative of, what our actual financial position and results of operations would have been had the Sale occurred on the dates indicated, nor are they indicative of our future financial position or results of operations. Readers of this Form 8-K filing are cautioned not to place undue reliance on such information and no one makes any representation regarding the information set forth below or our ultimate performance compared to it.
The unaudited pro forma condensed consolidated financial statements do not purport to present the financial position or results of operations of the Company had the transactions and events assumed therein occurred on the dates specified, nor are they necessarily indicative of the results of operations that may be achieved in the future.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the historical financial statements of the Company, including the related notes, and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” incorporated by reference to this Form 8-K filing.
Unaudited Pro Forma Condensed Consolidated Statement of Operations
For Three Months Ended June 30, 2011 | ||||||||
Historical BMB Munai, Inc. | Pro Forma Adjustments | Pro Forma BMB Munai, Inc. | ||||||
REVENUES | $ | - | $ | - | $ | - | ||
COSTS AND OPERATING EXPENSES | ||||||||
General and administrative | 2,184,939 | 28,001,260 | (b) | 30,186,199 | ||||
Interest expense | 2,118,147 | 1,428,601 | (c) | 3,546,748 | ||||
Amortization and depreciation | 13,479 | - | 13,479 | |||||
Total costs and operating expenses | 4,316,565 | 29,429,861 | 33,746,426 | |||||
LOSS FROM OPERATIONS | (4,316,565) | (29,429,861) | (33,746,426) | |||||
OTHER INCOME (EXPENSE): | ||||||||
Foreign exchange loss, net | (10,371) | - | (10,371) | |||||
Interest income, net | 7,603 | - | 7,603 | |||||
Other income/(expense), net | (9,500) | 6,846,084 | (d) | 6,836,584 | ||||
Total other income/(expense) | (12,268) | 6,846,084 | 6,833,816 | |||||
LOSS BEFORE INCOME TAXES | (4,328,833) | (22,583,777) | (26,912,610) | |||||
INCOME TAX BENEFIT | - | - | - | |||||
LOSS FROM CONTINUING OPERATIONS | (4,328,833) | (22,583,777) | (k) | (26,912,610) | ||||
INCOME FROM DISCONTINUED OPERATIONS | 8,654,065 | (8,654,065) | (a) | - | ||||
NET INCOME/(LOSS) | $ | 4,325,232 | $ | (31,237,842) | $ | (26,912,610) | ||
BASIC AND DILUTED NET LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | (0.08) | $ | (0.40) | $ | (0.48) | ||
BASIC AND DILUTED NET INCOME PER COMMON SHARE FROM DISCONTINUED OPERATIONS | $ | 0.16 | $ | (0.16) | $ | - | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED | 55,787,554 | 55,787,554 | 55,787,554 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
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Unaudited Pro Forma Condensed Consolidated Statement of Operations
For the Year Ended March 31, 2011 | ||||||||
Historical BMB Munai, Inc. | Pro Forma Adjustments | Pro Forma BMB Munai, Inc. | ||||||
REVENUES | $ | - | $ | - | $ | - | ||
COSTS AND OPERATING EXPENSES | ||||||||
General and administrative | 10,037,072 | 28,001,260 | (b) | 38,038,332 | ||||
Interest expense | 5,977,640 | 3,038,038 | (c) | 9,015,678 | ||||
Amortization and depreciation | 89,575 | - | 89,575 | |||||
Total costs and operating expenses | 16,104,287 | 31,039,298 | 47,143,585 | |||||
LOSS FROM OPERATIONS | (16,104,287) | (31,039,298) | (47,143,585) | |||||
OTHER INCOME (EXPENSE): | ||||||||
Foreign exchange loss, net | (415,803) | - | (415,803) | |||||
Interest income, net | 11,388 | - | 11,388 | |||||
Other income/(expense), net | 7,974 | 3,230,850 | (d) | 3,238,824 | ||||
Total other income/(expense) | (396,441) | 3,230,850 | 2,834,409 | |||||
LOSS BEFORE INCOME TAXES | (16,500,728) | (27,808,448) | (44,309,176) | |||||
INCOME TAX BENEFIT | 1,366,631 | - | 1,366,631 | |||||
LOSS FROM CONTINUING OPERATIONS | (15,134,097) | (27,808,448) | (l) | (42,942,545) | ||||
INCOME FROM DISCONTINUED OPERATIONS | 20,015,870 | (20,015,870) | (a) | - | ||||
NET INCOME/(LOSS) | $ | 4,881,773 | $ | (47,824,318) | $ | (42,942,545) | ||
BASIC AND DILUTED NET LOSS PER COMMON SHARE FROM CONTINUING OPERATIONS | $ | (0.28) | $ | (0.53) | $ | (0.81) | ||
BASIC AND DILUTED NET INCOME PER COMMON SHARE FROM DISCONTINUED OPERATIONS | $ | 0.38 | $ | (0.38) | $ | - | ||
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING – BASIC AND DILUTED | 53,284,666 | 53,284,666 | 53,284,666 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
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Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of June 30, 2011 | ||||||||
Historical BMB Munai, Inc. | Pro Forma Adjustments | Pro Forma BMB Munai, Inc. | ||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | $ | 247,525 | $ | 48,170,139 | (f) | $ | 48,417,664 | |
Promissory notes receivable and related interest | 192,090 | - | 192,090 | |||||
Prepaid expenses and other assets, net | 92,127 | - | 92,127 | |||||
Current assets from discontinued operations | 17,253,448 | (17,253,448) | (e) | - | ||||
Total current assets | 17,785,190 | 30,916,691 | 48,701,881 | |||||
LONG TERM ASSETS | ||||||||
Other fixed assets, net | 302,315 | - | 302,315 | |||||
Convertible notes issue cost | 658,150 | (658,150) | (g) | - | ||||
Restricted cash | - | 36,000,000 | (h) | 36,000,000 | ||||
Long term assets from discontinued operations | 308,145,196 | (308,145,196) | (e) | - | ||||
Total long term assets | 309,105,661 | (272,803,346) | 36,302,315 | |||||
TOTAL ASSETS | $ | 326,890,851 | $ | (241,886,655) | $ | 85,004,196 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable | $ | 353,096 | $ | - | $ | 353,096 | ||
Taxes payable, accrued liabilities and other payables | 252,697 | - | 252,697 | |||||
Accrued coupon payment | 3,061,898 | (3,061,898) | (i) | - | ||||
Current liability from discontinued operations | 27,988,501 | (27,988,501) | (e) | - | ||||
Total current liabilities | 31,656,192 | (31,050,399) | 605,793 | |||||
LONG TERM LIABILITIES | ||||||||
Convertible notes issued, net | 62,110,173 | (62,110,173) | (j) | - | ||||
Deferred taxes | 3,977,385 | - | 3,977,385 | |||||
Deferred consulting agreement | - | 5,000,000 | (b) | 5,000,000 | ||||
Long term liability from discontinued operations | 6,209,010 | (6,209,010) | (e) | - | ||||
Total long term liabilities | 72,296,568 | (63,319,183) | 8,977,385 | |||||
TOTAL LIABILITIES | 103,952,760 | (94,369,582) | 9,583,178 | |||||
COMMITMENTS AND CONTINGENCIES | - | - | - | |||||
SHAREHOLDERS’ EQUITY | ||||||||
Common stock outstanding | 55,788 | - | 55,788 | |||||
Additional paid in capital | 164,118,640 | - | 164,118,640 | |||||
Retained earnings | 58,763,663 | (124,933,296) | (e) | (88,753,410) | ||||
(22,583,777) | (k) | |||||||
Total shareholders’ equity | 222,938,091 | (147,517,073) | 75,421,018 | |||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | $ | 326,890,851 | $ | (241,886,655) | $ | 85,004,196 |
See the accompanying notes to the unaudited pro forma condensed consolidated financial statements.
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BMB MUNAI, INC.
Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements
PRO FORMA ADJUSTMENTS
(a) | Represents adjustments to eliminate the discontinued operations of Emir for the year ended March 31, 2011 and the three months ended June 30, 2011. The Company believes these adjustments are directly attributable to the Sale, and will not continue after the Sale. |
(b) | Reflects the estimated and budgeted amount of transaction costs borne by the Company related to the Sale. The transaction costs for the Sale include a finder’s fee and legal opinion fee to Grata in the aggregate amount of $ 2.95 million and a fairness opinion and success fee to UBS in the aggregate amount of $2.00 million. The Company has also budgeted amounts of $12.90 million for severance payments under executive contracts triggered by the Sale ($5.00 million of which is deferred and held in escrow). The remaining $10.15 million is accrued for other budgeted general and administrative expenses through the end of the indemnification period required by the transaction. See the Estimated Net Cash Proceeds note. |
(c) | Represents estimated interest expense on the Company’s Senior Notes as if repayment of the notes will occur, based on management’s estimate, on September 19, 2011. |
(d) | Represents the gain (loss) on the Sale resulting from the purchase price less book value of Emir and canceling the premium and issuance costs of the issued Senior Notes. |
June 30, 2011 | March 31, 2011 | ||||
Gain on Sale of Emir | $ | 3,732,163 | $ | 2,235,076 | |
Gain on canceling coupon payment liability | 3,061,898 | 1,430,108 | |||
Loss on canceling Senior Note issuance costs | (658,150) | (738,062) | |||
Gain on canceling Senior Note | 710,173 | 303,728 | |||
Other income/(expense), net | $ | 6,846,084 | $ | 3,230,850 |
(e) | Represents adjustments to eliminate assets and liabilities and shareholder’s equity of Emir transferred to the Buyer at the Sale. |
(f) | Represents adjustments for the estimated net cash proceeds less cash placed in escrow for the indemnification period. See the Estimated Net Cash Proceeds note. |
(g) | Represents the expensing of the Senior Notes issuance costs upon repayment. |
(h) | Represents the cash amount placed in escrow as required by the indemnification clause of the Purchase Agreement. See the Estimated Net Cash Proceeds note. |
(i) | Represents payment of the accrued coupon payment along with the repayment of the Senior Notes. |
(j) | Represents the canceling of the Senior Notes upon repayment from cash proceeds from the Sale. |
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(k) | Represents the total estimated loss on both the Sale of Emir and the repayment of the Senior Notes for the period ending June 30, 2011. |
(l) | Represents the total estimated loss on both the Sale of Emir and the repayment of the Senior Notes for the period ending March 31, 2011. |
ESTIMATED NET CASH PROCEEDS
The estimated net cash proceeds from the Sale as if the Sale had occurred on June 30, 2011 based on the pro forma adjustments described above, are as follows:
June 30, 2011 | ||
Gross proceeds from sale | $ | 170,000,000 |
Transaction costs | (4,950,000) | |
Repayment of convertible notes | (61,400,000) | |
Interest expense | (1,428,601) | |
Severance payments | (7,895,801) | |
General and administrative expenses | (10,155,459) | |
Estimated net cash proceeds | 84,170,139 | |
Less cash placed in escrow | (36,000,000) | |
Estimated unrestricted net cash proceeds | $ | 48,170,139 |
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