Report in the Courier Mail
Liam Walsh
October 20, 2009 11:00pm
CASH-strapped weapons developer Metal Storm has entered talks with a foreign white-knight financier over a deal potentially worth more than $US25 million ($A27 million), according to sources close to the company.
Shares in Brisbane-based Metal Storm were locked in a trading halt at 2.6c yesterday, pending first payment under an agreement.
"Metal Storm has reached agreement with an overseas investor regarding the terms of an equity investment," said the Brisbane-based company, whose lead product currently is a three-shot grenade launcher.
Metal Storm has yet to sell any weapons after 10 years as a listed company. It has accumulated $95 million in losses and put some projects - like an electronic handgun - on the backburner.
It staved off potential collapse this year after securing $2.6 million from existing shareholders and securing a deadline extension for $19 million in convertible notes this September.
Metal Storm had previously flagged it been seeking an equity investor, taking a stake of between $10 million and $30 million.
It is expected the latest deal could involve an equity placement and debt issue worth more than $US25 million.
Such a move might prove dilutive to shareholders who have seen stock tumble from highs of $3.31 in July 2000. One recent deal, involving the altering convertible notes, saw Singapore financier Harmony increase its potential holding over Metal Storm.
Company founder and inventor Mike O'Dwyer has recently been offloading stock, with his latest filing showing his stake is down from 20.8 per cent to 19.7 per cent
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