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Orbital Redeems Convertible Note

18 January 1999

Orbital Redeems Convertible Note

    PERTH, Western Australia, Jan. 15 -- Orbital Engine
Corporation has redeemed a US$20 million convertible note issued in
August 1998.  Orbital had drawn down only US$10 million of the note to date
but has extinguished the entire US$20 million facility.
    "The group's better than forecast cash position and recent movements in
the share price, make redemption of the note the most effective use of company
funds." said, Mr. Peter Hatfull, Orbital's Chief Financial Officer.  "Revenues
from customer funded engineering programs and the expansion of our
relationship with Siemens, ensure Orbital has the capability to respond to the
emerging opportunities for our technology and the manufacturing capacity to
provide Orbital product to customers across all markets.  We also appreciate
the flexibility of the noteholder in making this redemption transaction
possible."
    Costs of the negotiated redemption terms are almost completely offset by
foreign exchange gains arising from the strengthening of the Australian dollar
against the US dollar during the time Orbital held the funds.  Key elements of
the redemption are:

    *  7.5% redemption premium on amounts drawn down; and
    *  Issue of 375,000 options for Orbital's American Depository Receipts.
       One third of the options are exercisable at US$3, one third at
       US$3.50 and the remainder at US$4.

    The redemption terms are more favourable than those agreed to in the
original contract.
    Orbital is a leading international developer of engine technologies using
direct in-cylinder fuel injection and lean-burn systems for enhanced fuel
economy and lower emissions.  The company serves the worldwide automotive,
marine, recreational and motorcycle markets.  Headquartered in Perth, Western
Australia, Orbital stock is traded on the Australian Stock Exchange (OEC), the
New York Stock Exchange (OE) as well as the Berlin (ORE) and Frankfurt (OREA)
Exchanges.