the big bang theory, page-12

ust 01, 2009
Article from: Australian Associated Press
INVESTORS have thrown a lifeline to cash-strapped weapons maker Metal Storm as it tries to remain financially secure and on Australian soil.

Metal Storm has taken a financial hit from the global financial crisis and was banking on a favourable outcome at a shareholders meeting in Brisbane so it can advance its state-of-the-art weaponry from the testing phase to orders.

Yesterday, the majority of Metal Storm convertible noteholders voted in favour of a two-year extension to the maturity date of nearly $20 million in convertible notes that were due to expire on September 1.

If the extension had not been approved, the company would have faced financial pressure.

Metal Storm chairman Terry O'Dwyer told investors yesterday that the board was focused on a small window of opportunity before "crunch time" in October. "The company is in a fragile position," he said.

"We need to be very balanced about what is in the best interests of our shareholders.

"Frankly, if it's a choice of shareholder dilution or death, there will be some dilution."

Shareholders have shown their support for the company over the past month, allowing it to raise more than $2.6m under a share purchase plan, and voting in favour of the note extension.

Chief executive Lee Finniear would not rule out the possibility of the company moving offshore and said it might accept investment from a foreign entity.

"At this stage there's probably more chance of a non-Australian investment coming through," Dr Finniear said. "I don't know how you can ever predict that (the company may go offshore) given that everyone's allowed to buy on market.

"And also I really can't say it (the company) wouldn't go overseas, is the short answer."

Red tape surrounding the Australian Defence Force (ADF) weapons procurement process has also added to its woes.

Dr Finniear said although the ADF and the US military might be reluctant to buy its weapons before they passed testing -- or qualifying -- stage, they could support the company by helping with the qualifying process.

Metal Storm shares