announcement 7 dec, page-7

* CITY BEAT: Michael Bennet
* From: The Australian
* December 07, 2009 11:12AM




EMBATTLED weapons maker Metal Storm has hedged its bets and flagged a $25 million equity raising after the first tranche of Assure Fast Holdings' $US35m package again failed to arrive over the weekend.

In the latest development to the saga, which began on October 22, Metal Storm said today it would commence documentation for a further equity funding for up to $25m as a whole or partial substitute to the AFHL funding.

This is despite saying it expects the $2.1m first tranche to arrive by 7pm Brisbane time tomorrow and had arranged a short term cash injection to remain solvent.

“During Friday and Saturday the company has negotiated an immediate small equity placement to provide carry forward funding and documentation for that is expected to be completed today,” Metal Storm said in a statement



Chairman Terry O’Dwyer and chief executive Lee Finniear did not return calls.

Investors liked the news, sending the stock up more than 10 per cent to 2.9 cents in early trade.

The Brisbane-based company reiterated it is testing the issue of solvency each day and would need to appoint an administrator “as soon as that test cannot be satisfied”.

“The board is satisfied that the probability of that occurring has reduced but is not yet fully eliminated,” Metal Storm said.

Today’s delay is the ninth overall and follows three delays last week.