Australian company Metal Storm, home of the eponymous electrically-fired sequential-firing high rate of fire concept, became insolvent and was placed under administration in 2012, but the fallout is ongoing, and could become considerable. Financial Review reports:
A New York-based investment firm advised by John Hancock will sue Equity Trustees for tens of millions of dollars following the demise of electronic ballistics technology company Metal Storm.
The damages claim by the Lind Partners will follow a lengthy and technical legal dispute over how the voluntary administration of Metal Storm was handled in 2012. Lind helped finance the company, and held secured notes, and ANZ Bank was the trustee.
A Supreme Court judge ruled in August that Lind’s Australian Special Opportunity fund could pursue a “damages or equitable compensation” claim against Metal Storm’s trustee; and the time to appeal that order has now lapsed.
ANZ has since sold its trustee business to Equity Trustees, and a spokesman for the bank said that Equity Trustees, and not ANZ, would be liable for any damages. An Equity Trustees spokeswoman declined to comment.
Lind managing director Jeff Easton said money retrieved through a damages claim would be used to increase its investment program in Australian companies. He said the technology sector was attractive, especially given the country’s research and development tax incentive.
“We are committed to Australia even though it’s been a very long haul,” said Mr Easton, referring to the litigation.
“I think we are in the first or second innings of the renaissance of the tech sector.”
Claim likely to run to “tens of millions of dollars”
Mr Easton declined to comment on how much the damages claim would be. But those with knowledge of the litigation said a damages claim would likely run into the “tens of millions of dollars”.
Lind argues that the trustee’s actions prevented Metal Storm from securing contracts or progressing contract negotiations or obtaining a fair price for its assets. ANZ’s actions may have also allegedly deprived Lind from purchasing Metal Storm’s intellectual property, according to Lind.
Australian defence company DefendTex has since acquired Metal Storm’s technology.
The concept of Metal Storm is to use an obdurating element in the projectile of each round to seal the bore, where rounds are stacked in a similar fashion to a Roman candle in the barrel and fired sequentially. The obdurating element helps prevent hot propellant gases from flowing rearward and affecting the rounds behind the one currently being fired. The result is a weapon that can produce extremely high rates of fire. With no need for the normal cycling of a mechanical action, some multi-barrel Metal Storm prototypes were capable of rates of fire of up to a million rounds per minute.
Metal Storm has had a tumultuous ride in the two decades since its founding. Despite winning several research contracts in the 2000s, the company was showing signs of insolvency even as early as 2010. Lind Partners, a New York-based asset management firm, backed the company in late 2011. By July of 2012, the company entered voluntary administration with the Australian government, which lasted until it entered receivership in 2014. In 2015, the company’s assets were purchased by another Australian company, DefendTex.
Thanks to Daniel for the tip.