SOURCE: Metal Storm Limited

Metal Storm Limited

April 18, 2012 02:37 ET

Metal Storm Limited: $4.65 Million Subscription Agreement; $11.9 Million Secured Debt Eliminated

Metal Storm Gets Backing From European Institutional Investor; Eliminates $11.9 Million of Secured Debt; Prepares for Non-Lethal Weapon Production

BRISBANE, AUSTRALIA--(Marketwire - Apr 18, 2012) - Metal Storm Limited. (PINKSHEETS: MTSXY)

Defence technology company Metal Storm Limited ("Company") has enhanced its balance sheet through a multi-million dollar subscription agreement to reduce its debt burden and assists its program for non-lethal weapon and ammunition production.

The Company announced today it had signed subscription agreements for $4.65 million of new equity, to fund a reduction of Secured Note debt and to provide a substantial injection of essential working capital to further the MAUL, FireStorm and Managed Lethality Grenade Launcher non-lethal weapon programs.

Simultaneously the Company has signed an agreement with the majority noteholder to:

  • Redeem $9.0 million of Secured Notes for $1.7 million cash
  • Convert $1.4 million of Secured Notes to shares
  • Forgive a further $1.5 million of Secured Notes under an existing debt forgiveness deed

The elimination of $11.9 million of secured debt will materially improve the Company's balance sheet and reduce the potential for further dilution, as this debt can no longer be converted to shares.

The deal also increases working capital by $2.95 million, after the secured note redemption, enabling the Company to focus on its product delivery program.

Shareholder and noteholder approval is required and the Company will hold appropriate meetings as soon as possible.

Metal Storm CEO, Dr Lee Finniear, said the transaction would help the Company's primary mission of getting its products to market in volume.

"The international military and law enforcement community continues to register demand for the MAUL weapon system," Dr Finniear said.

"Our main challenge is not the technology, but obtaining sufficient capital to get to full production. The cash from this transaction will enable us to focus in particular on the MAUL program. The Company believes that a healthier balance sheet will further encourage partners and investors to support our product programs to full delivery," he said.

Metal Storm Chairman Terry O'Dwyer said that this transaction would assist with a fundamental restructure of the Company's capital base and help deliver greater value for shareholders and other investors.

"The Company has been striving to raise capital in a difficult global financial environment while carrying a very high level of senior secured debt on its balance sheet," Mr O'Dwyer said.

"Through this transaction we are able to eliminate the majority of the secured debt at a much lower dilution than if it had been converted.

"Without the burden of secured debt on this scale, the fundamental value of our equity is improved, and the lower debt burden should make the Company more attractive to shareholders and other investors."

The majority noteholder is the Australian Special Opportunity Fund, L.P., an institutional investment fund managed by The Lind Partners, LLC, a New York-based asset management firm (together, "Lind").

Jeff Easton, Managing Partner of The Lind Partners, LLC, stated, "The Lind Partners has a deep belief in the need for Metal Storm's non-lethal technology and is pleased to play a role in helping the Company position itself for future growth."

Further details can be found at http://www.metalstorm.com/agreement.html

About Metal Storm
Metal Storm Limited is a multi-national defence 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. Metal Storm Limited technology and products are represented in the USA by Metal Storm Inc., which has offices in Arlington Virginia.

Metal Storm is working with government agencies and departments, as well as industry, to develop a variety of systems utilising 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 utilises 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.

Safe Harbour
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 & USA
    Dr Lee Finniear
    Chief Executive Officer
    Metal Storm Limited
    Ph: +61 7 3147 8600