Sydney, May 19, 2006 AEST (ABN Newswire) - Metal Storm Limited (ASX: MST) today announced that it had raised A$3.0 million under the recent Share Purchase Plan (SPP). Shareholders who applied for A$5,000 of shares under the SPP will receive 37,622 shares. Metal Storm will issue a total of 22,647,240 shares under the SPP.

This is a reflection of the 20% discount to the volume weighted average sale price of Metal Storm shares on ASX during the period from 12 May to 18 May 2006 (inclusive). The Issue Price is A$0.1329 per share calculated in accordance with the terms and conditions of the SPP.

The shares will be allotted today, and the Company expects to despatch holding statements by Monday 22 May 2006. This is the first stage of the Company's capital raising.

The second stage, announced on 8 May 2006 is the signing of a preliminary agreement with Harmony Capital Partners Pte Limited (Harmony) of Singapore to facilitate a Renounceable Rights Issue of A$27.5 million in unsecured Convertible Notes with attaching Options. As foreshadowed in that announcement, the Company has now elected to take up a working capital facility of A$5 million to provide short term working capital should the Company need it before completion of the Rights Issue. The parties are in the process of negotiating the detailed transaction documents to give effect to these proposed transactions.

Key terms of the Loan Facility of are:

Borrower: Metal Storm Limited
Lender: Harmony or its nominee(s)
Facility Limit: A$5 million
Repayment Date: 1 year from the date of initial drawdown
Interest Rate: 10.00% per annum, to be paid quarterly in arrears
Undrawn Commitment Fee: 2% per annum to be paid quarterly in arrears on the undrawn amount of the Facility Limit
Security: Fixed and floating charge over all the assets and undertaking of the Company
Availability: The Loan is to be made available by one or more drawings on or after completion of the relevant loan agreement and security documents for the Loan.

Each drawing must be a multiple of A$500,000 and the Borrower must give 7 days notice prior to the proposed drawdown date

Repayments: 100% of amount outstanding to be repaid on the Repayment Date or on occurrence of an Event of Default. The Borrower must ensure that proceeds of the rights issue are applied to repay the Loan

Lender Options: The Lender to be issued 10 million Options
ASX Quotation: The Company will seek ASX quotation of the Options.

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$5 million to US$50 million in size.

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.


Jim MacDonald
Chief Financial Officer
Metal Storm Limited
TEL: +61 (0) 7 3221 9733

ABN Newswire
ABN Newswire This Page Viewed:  (Last 7 Days: 7) (Last 30 Days: 21) (Since Published: 4576)