metal storm confirms details

Metal Storm confirms details of proposed debt
forgiveness by ASOF

Brisbane, Australia – 3 November 2011: Metal Storm Limited.
Metal Storm refers to its recent announcements on 17 October 2011 and 25 October 2011 in relation to:
• the proposed acquisition by the Australian Special Opportunity Fund LP (ASOF) of existing
secured convertible notes (Secured Notes) with a face value of approximately $13 million (Notes
Purchase);
• a non-underwritten, pro rata non-renounceable rights issue of ordinary shares in Metal Storm to
shareholders in Australia, New Zealand and Singapore to raise up to approximately $6.6 million
(Entitlement Offer); and
• ASOF’s proposed forgiveness of the face value of part of the Secured Notes debt (Debt
Forgiveness).
The Notes Purchase is subject to a number of conditions including the approval of noteholders and
shareholders to amendments to the terms of the existing Note Terms and Trust Deed. Metal Storm
currently expects to hold the necessary meetings of noteholders and shareholders to seek these approvals
in January 2012. Further information will be set out in the notices of meeting for the noteholder and
shareholder meetings which are expected to be despatched in the next four to six weeks.
Since the announcement of the proposed Notes Purchase and Debt Forgiveness on 17 October 2011,
Metal Storm and ASOF have being discussing the form and substance of the Debt Forgiveness and have
today entered into a Deed of Debt Forgiveness which provides that:
• ASOF will forgive $1 of face value of its Secured Notes for every $1 raised from shareholders
under the Entitlement Offer, capped at a maximum of $3.6 million;
• the Debt Forgiveness is subject to a number of conditions, including that the Notes Purchase
becomes effective and that no insolvency event occurs in relation to Metal Storm; and
• the Debt Forgiveness will only become effective once ASOF has converted the balance of the
Secured Notes it holds into shares or on the maturity date of the Secured Notes, whichever occurs
first.
Metal Storm and ASOF have also entered into a Note Escrow Deed which will prevent ASOF from selling
the Secured Notes that are the subject of the Debt Forgiveness after the Notes Purchase becomes
effective.
Commenting on the Debt Forgiveness arrangements Metal Storm’s CEO, Dr Lee Finniear, said that,
“ASOF’s proposed debt forgiveness provides a great incentive for eligible shareholders to participate in the
Entitlement Offer. For every dollar subscribed, shareholders will not only be providing the Company with
additional working capital but will also be contributing to a reduction in the Company’s outstanding debt.
The Entitlement Offer Booklet is due to be despatched to eligible shareholders next week, and I encourage
these shareholders to join ASOF by supporting the Company in this important capital raising initiative.”