SOURCE: Metal Storm Limited

July 20, 2006 01:27 ET

Capital Raising Update

Metal Storm Signs Facilitation Agreement

ARLINGTON, VA -- (MARKET WIRE) -- July 20, 2006 -- Metal Storm Limited (ASX: MST) and (NASDAQ: MTSX)

Metal Storm Limited has today entered into a facilitation agreement with Harmony Investment Fund Limited as a preliminary step to the execution of underwriting agreements and the lodgment of the prospectus for the previously announced Renounceable Rights Issue which is expected to occur shortly.

The facilitation agreement documents some of Harmony's requirements for providing the working capital facility to the company signed on 16 June 2006, and agreeing to sub-underwrite the proposed Renounceable Rights Issue by the Company.

The key terms of this agreement include:

(a) the right for Harmony to nominate one director for appointment to the board of directors of Metal Storm;

(b) the requirement to obtain Harmony's prior consent to the appointment of a CEO of Metal Storm; and

(c) an obligation on Metal Storm to issue 10,000,000 Options to Harmony in consideration for Harmony providing the working capital facility and 65,000,000 Options to Harmony on and subject to the issue of convertible notes under the Rights Issue.

A further announcement will be made on lodgment of the Prospectus with ASX.

Notes:

Metal Storm's Australian Stock Exchange trading code: MST

Metal Storm's NASDAQ Small Cap ticker symbol: MTSX

About Metal Storm

Metal Storm Limited is a multi-national defense technology company engaged in the development of electronically initiated ballistics systems using its unique "stacked projectile" technology. The company is headquartered in Brisbane, Australia and incorporated in Australia, with an office in Arlington, Virginia.

Metal Storm is working with government agencies and departments, as well as industry, to develop a variety of systems utilizing the Metal Storm non-mechanical, electronically fired stacked ammunition system.

Metal Storm's weapon technology uses computer-controlled electronic ignition and a system of stacked projectiles, to achieve a completely non-mechanical gun that is very lightweight and compact, providing a very high firepower to weight ratio. The Metal Storm weapons system utilizes multiple barrels mounted together on one platform which allows varying munitions types to be deployed in a single, low cost, lightweight weapon system. Firing the weapons by electronic ignition requires no moving parts, allowing reliable long term unattended weapon operation.

About Harmony Capital Pte Limited

Harmony Capital Partners is a Singapore-based fund management company which manages a US$500m capacity Fund. The primary strategy of Harmony is to invest in special situations in Asia including Australia and New Zealand. The principals of Harmony, Suresh Withana and John Nicholls, are very familiar with the investment environment in Australia, particularly in the turnaround space with experience in a number of industry sectors. Harmony has a number of large investors in its fund including a cornerstone investor with a significant capital base providing it with the capability to execute investments ranging from US$5m to US$50m in size.

Safe Harbor

Certain statements made herein that use the words "estimate," "project," "intend," "expect," "believe" and similar expressions are intended to identify forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks and uncertainties which could cause the actual results, performance or achievements of the company to be materially different from those which may be expressed or implied by such statements, including, among others, risks or uncertainties associated with the development of the company's technology, the ability of the company to meet its financial requirements, the ability of the company to protect its proprietary technology, potential limitations on the company's technology, the market for the company's products, government regulation in Australia and the US, changes in tax and other laws, changes in competition and the loss of key personnel. For additional information regarding these and other risks and uncertainties associated with the company's business, reference is made to the company's reports filed from time to time with the Securities and Exchange Commission, including the company's Form 20-F.

Contact Information

  • Company Contact:
    Australia
    Ian Gillespie
    Chief Operating Officer
    Ph: +61 (0) 7 3221 9733

    US
    Peter Faulkner
    SVP US Operations
    Ph: +1 703 248 8218