Metal Storm announces non-renounceable pro rataRights Issue to...

Metal Storm announces non-renounceable pro rata
Rights Issue to raise up to A$6.6 million

Brisbane, Australia – 25 October 2011: Metal Storm Limited.

Further to the announcement made on 17 October 2011, Metal Storm today announces the details of a nonrenounceable
pro rata rights issue of ordinary shares in Metal Storm to shareholders in Australia, New Zealand
and Singapore (Eligible Shareholders) to raise up to approximately A$6.6 million (Entitlement Offer). The
Entitlement Offer is not underwritten.
The funds raised will be used as working capital to:
• continue the development of Metal Storm’s current products;
• allow Metal Storm to reduce its reliance on its equity line of credit with Dutchess Opportunity Fund II LP,
at least in the short term; and
• cover Metal Storm’s ongoing overhead and operating costs.
Further information will be set out in the Entitlement Offer Booklet which is expected to be mailed to Eligible
Shareholders on 7 November 2011.
Details about the Entitlement Offer
The Entitlement Offer provides Eligible Shareholders with the opportunity to subscribe for one new share in the
Company (New Share) for every share held on the record date (3 November 2011), at an issue price of $0.003
per New Share. Eligible Shareholders may also apply for New Shares in excess of their entitlements, although
any such application may be scaled back (in whole or part) if the Entitlement Offer is oversubscribed. The New
Shares will be quoted on ASX. The full terms of the Entitlement Offer will be set out in the Entitlement Offer
Booklet.
The Entitlement Offer is not subject to a minimum amount of funds being raised. As long as the Entitlement
Offer is not oversubscribed, the Company will accept all valid applications for New Shares in full.
Further details about the Entitlement Offer, including key dates, are set out below.
Summary of the Entitlement Offer
Issue price $0.003 per New Share
Entitlement (Eligible Shareholders may also apply for additional New Shares)
One New Share for every
Share held at 7.00 pm
(Sydney time) on
3 November 2011
Metal Storm Limited
ACN 064 270 006
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Approximate discount to the volume weighted average price of Shares traded
on ASX in the three months ending 21 October 2011
25.5%
Maximum number of New Shares which can be issued under the Entitlement
Offer
2,225,078,911
Approximate amount which can be raised under the Entitlement Offer (before
costs)
A$6.6 million
Approximate number of Shares that will be on issue if the Entitlement Offer is
fully subscribed1 4,450,157,822
1 Assuming the Entitlement Offer is fully subscribed, no options are exercised, no convertible notes are converted
into shares and no further securities are issued.
Key dates1
Ex Date – Shares trade without an entitlement to participate in the Entitlement Offer 27 October 2011
Record Date to determine entitlements 3 November 2011
Entitlement Offer documentation sent to Eligible Shareholders 7 November 2011
Opening date for applications to be made 7 November 2011
Closing Date – last date for receipt of applications (5.00 pm Sydney time) 21 November 2011
Trading of New Shares expected to commence on ASX on a deferred settlement basis 22 November 2011
Allotment Date – date New Shares are issued 29 November 2011
Normal trading of New Shares expected to commence on ASX 30 November 2011
Holding statements for New Shares expected to be despatched 30 November 2011
1 Metal Storm reserves the right to vary the Timetable without notice, including by extending or bringing forward the
Closing Date.
Update on proposed changes to the terms of the convertible notes
On 17 October 2011, Metal Storm announced that Lind Partners, LLC, as manager of the Australian Special
Opportunity Fund LP (ASOF), had agreed to purchase existing Secured Notes with a face value of
approximately A$13 million and assist the Company with a reorganisation of its capital structure. One of the
proposals supported by ASOF is an extension to the maturity date of Metal Storm’s existing Secured Notes and
Interest Bearing Notes for three years to 1 March 2015. Metal Storm has agreed to seek approval from its
noteholders and shareholders for this extension.
In addition to the proposed extension to the maturity date of these convertible notes, Metal Storm also
proposes to seek approval from noteholders and shareholders to amend the conversion price of the convertible
notes so that the convertible notes will convert on a market-based formula without a minimum conversion price
(which is significantly above the current share price).
Metal Storm Limited
ACN 064 270 006
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Further information about the proposed amendment to the conversion price and other amendments to the
convertible notes will be set out in the notices of meeting for the noteholder and shareholder meetings.
Clarification of issue of convertible security
Metal Storm wishes to clarify the issue of the security referred to as a Convertible Note in its appendix 3B
on 18 October 2011. The appendix 3B was issued in error as the issue of the Convertible Note will not
occur until shareholder approval is obtained at the upcoming shareholder meeting for the Convertible
Note and the final tranche of $200,000 is paid. Prior to that time, Metal Storm has a debt to ASOF for the
amounts that will be or have already been advanced. Metal Storm confirms that no equity security has
been issued at this time. The current capital structure is as set out in the appendix 3B of today’s date.
ENDS