SYDNEY: An Australian schoolgirl who spent 10 hours with what she thought was a bomb chained around her neck said on Wednesday she was “very relieved” a man had been arrested over the bizarre incident.

Madeleine Pulver, 18, became a global news story two weeks ago when a masked man entered her luxury Sydney harbourside home, strapped a suspected collar bomb around her neck and left, telling her to count to 200.

She said Wednesday she was “glad it is all over” after Australian police and the United States FBI arrested a businessman in Kentucky in connection with the case.

“It's all very surreal,” Pulver told reporters who have been camped outside her door since the August 3 incident, adding she was “very relieved”.

Australian citizen Paul “Doug” Peters, 50, was arrested by an FBI SWAT team on Monday and appeared in a US court on Tuesday.

Police, who will apply to have him extradited to Australia, will allege that he broke into Pulver's home and fastened the fake bomb around her throat.

Explosives experts worked for 10 hours to remove the black box, which had a USB storage device and a cord attached, but later found the device to have been part of an elaborate hoax.

Authorities are still working to pinpoint a motive, with the Pulver family mystified as to how they became embroiled in the dramatic saga which gripped the nation.

“This has been a baffling and frightening experience,” said Madeleine's father Bill Pulver, a businessman.

He said his daughter, who is studying for her final school exams, was “a bright, happy young woman who, for reasons we still don't understand, has had her life turned upside down going through this dreadful experience”.

Australian newspapers have given the story extensive coverage, reporting that Peters is a father-of-three who has previously worked in Malaysia, and grew up in Hong Kong where his father worked as a pilot.

Peters, who attended The Scots College in Sydney's exclusive Bellevue Hill, was arrested at his ex-wife's home in La Grange, some 50 kilometres (31 miles) from Louisville, Kentucky.

He appeared in the US District Court in Louisville on Tuesday, with his legs and wrists shackled.

In an indictment, police allege he was carrying a baseball bat and wearing a balaclava when he walked into Madeleine's bedroom, telling her: “Sit down and no-one needs to get hurt.”

After allegedly fixing the fake bomb to her he left a note stating: “Powerful new technology plastic explosives are located inside the small black combination case delivered to you.

“The case is booby trapped. It can ONLY be opened safely, if you follow the instructions and comply with its terms and conditions.”

Included in the note was a warning not to alert authorities but to await instructions for transferring a “defined sum” and an email address for communicating with the intruder.

This email account led police to Peters after he allegedly accessed it several times at two locations north of Sydney, each time captured on video surveillance. But Peters' connection to the Pulvers has not yet been fully revealed.

“The police have obtained information that Paul Douglas Peters was formerly employed by a company with which the victim's family has links,” the indictment states.

Peters, who flew to the US on August 8, was ordered to be remanded in custody pending an October 14 hearing to determine if he will be extradited to face Australian charges of kidnapping, extortion and aggravated breaking and entry.