report in the age

Storm share dump follows funding farce
IAN MCILWRAITH
December 11, 2009

METAL Storm's estranged founder, Mike O'Dwyer, has continued to dump shares as the group hinted strongly it is closer to pulling out of a $US35 million ($A38.6 million) funding deal because the first downpayment is 38 days overdue.

Mr O'Dwyer revealed he had sold more than 10 million shares last week, at prices as low as 1.9¢ each, compared with yesterday's 15 per cent fall in Metal Storm's share price to 2.2¢.

That slide came after the weapons development company confirmed yesterday that a $2.1 million cash injection from a Filipino investor had not arrived.

It is understood the money had still not turned up by last night and that the board is considering whether to mount legal action against Robert Rivero and his Cayman Islands-based Assure Fast Holdings over the non-arrival of the cash and loans he pledged in late October.

Metal Storm chairman Terry O'Dwyer revealed the company's growing frustration with Mr Rivero, who was due to deliver the first instalment on November 3, saying in a statement to the Australian Securities Exchange that ''the board is conscious of the delays and annoyed by them''.

While the language is mild, it is a sign of its growing impatience with the unfulfilled promises of a deal struck in Hong Kong last October with Mr Rivero and his financiers, the Royal Bank of Scotland.

Metal Storm, which has been trying for a decade to commercialise its ''million rounds a minute'' weapons delivery systems, has hovered on the brink of insolvency for weeks.

The pressure has eased slightly thanks to emergency share placements this week at steeply discounted prices of 1.5¢ and 1.75¢ a share which have put a badly needed $400,000 into its bank account and enabled the board to say that it is ''unlikely … in the short term'' to have to appoint an administrator.

The deal with Mr Rivero would also have effectively handed control of the company to AFH because of the amount of shares to be issued.

This week the board revealed it had lined up a ''Plan B'' by negotiating a further agreement with an unnamed group to provide it with $25 million if the AFH arrangements fall over