Sydney, June 16, 2006 AEST (ABN Newswire) - Metal Storm Limited (ASX: MST)(NASDAQ: MTSX) today announced that it has signed a one year working capital facility of AU$5 million with Harmony Investment Fund Limited (Harmony) as previously foreshadowed in its 8 May 2006 announcement regarding capital raising plans.
The working capital facility will be used only if it is necessary to supplement the company's available cash reserves, which include the $3 million raised under the recent Share Purchase Plan. The facility is secured by a fixed and floating charge over the company's assets, which will be discharged once the company has completed the planned second stage of its capital raising and any money owing under the facility is repaid.
The second stage of the company's capital raising plan is a Renounceable Rights Issue of AU$27.5 million in unsecured Convertible Notes with attaching Options. The rights issue is to be fully underwritten by Patersons Securities Limited and fully sub-underwritten by Harmony.
As previously announced, a preliminary agreement was signed with Harmony on 8 May 2006 under which Harmony agreed to facilitate the Rights Issue subject to the satisfactory completion of due diligence; the negotiation and execution of transaction documents; and, the obtaining of any necessary approvals required to implement the rights issue.
The company is pleased to report that Harmony has advised that their due diligence process has been completed and that they have obtained Foreign Investment Review Board approval to proceed with the transaction.
It is expected that a prospectus for the rights issue of convertible notes will be lodged with ASIC by 31 July 2006.
The combination of the planned $27.5 million Renounceable Rights Issue and the recently completed AU$3 million Share Purchase Plan is expected to provide sufficient funding to meet the company's cash requirements over the next 3 years.
Key terms of the Working Capital Facility are:
Borrower: Metal Storm LimitedLender: Harmony Investment Fund LimitedFacility Limit: AU$5 millionRepayment Date: 1 year from the earlier of the date of initial drawdown and 31 August 2006Interest Rate: 10.00% per annum, to be paid quarterly in arrearsUndrawn Commitment Fee: 2% per annum to be paid quarterly in arrears on the undrawn amount of the Facility LimitSecurity: Fixed and floating charge over all the assets and undertaking of the CompanyAvailability: Subject to execution of a Facility Agreement with Harmony within 10 business days of the execution of this agreement. Each drawing must be a multiple of AU$500,000 and the Borrower must give 5 business days notice prior to the proposed drawdown date.Repayments: 100% of amount outstanding to be repaid on the Repayment Date or on occurrence of an Event of Default. The Borrower must ensure that proceeds of the rights issue are applied to repay the LoanLender Options: The Lender to be issued 10 million OptionsASX Quotation: The Company will seek ASX quotation of the Options.
About Harmony Capital Pte Limited
Harmony Capital Partners is a Singapore-based fund management company which manages a US$500m capacity Fund. The primary strategy of Harmony is to invest in special situations in Asia including Australia and New Zealand. The principals of Harmony, Suresh Withana and John Nicholls, are very familiar with the investment environment in Australia, particularly in the turnaround space with experience in a number of industry sectors. Harmony has a number of large investors in its fund including a cornerstone investor with a significant capital base providing it with the capability to execute investments ranging from US$5 million to US$50 million in size.
Contact
Ian Gillespie
Chief Operating Officer
Metal Storm Limited
TEL: +61 (0) 7 3221 9733
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