Stock Exchange & Press Releases 2012

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Elektrobit Group Oyj - ELEKTROBIT CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION

August 28, 2012

ELEKTROBIT CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION


STOCK EXCHANGE RELEASE

Free for publication on August 29, 2012, at 12.30 a.m. (CEST+1)

ELEKTROBIT CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION

On August 28, 2012 U.S. time, Elektrobit Inc., a subsidiary of EB, Elektrobit Corporation, received a cash payment of USD 13.5 million (EUR 10.8 million as per exchange rate of August 28, 2012) (the "Settlement Payment") in full and final satisfaction of its claim against TerreStar Corporation and in resolution of all disputes between EB and the other parties in the TerreStar Corporation Chapter 11 reorganization cases under United States Bankruptcy Code. Upon receipt by Elektrobit Inc. of the Settlement Payment, certain mutual releases of liability and other agreements set forth in the now approved Settlement have become effective. Except insofar as, pursuant to the terms of the parties' agreement, Elektrobit Inc. has agreed to support the Chapter 11 plan of TerreStar Corporation, it is anticipated that EB's participation in the TerreStar Corporation Chapter 11 cases is concluded.

The Settlement Payment in the TerreStar Corporation Chapter 11 cases alone, and without any further distribution from the TerreStar Networks Chapter 11 cases, will result a positive effect of approximately USD 1.6 million (EUR 1.3 million as per exchange rate of August 28, 2012) on EB's operating result and a positive effect on EB's cash flow of approximately USD 13 million (EUR 10.4 million as per exchange rate of August 28, 2012) during the third quarter of 2012. Having now received the Settlement Payment, EB expects no further recovery from TerreStar Corporation or its bankruptcy estate.  However, the full implications of the TerreStar bankruptcy cases on EB's profit, financial position and outlook can be finally determined only when the outcome of the TerreStar Networks Chapter 11 cases is known, including all costs related to collecting the receivables and e.g. confirmed tax treatment. The Settlement Payment does not affect the outlook for the year 2012 published in the Interim Report of August 7, 2012 as the guidance on the profit outlook was based on the assumption that there will be no further bookings of impairments of EB's accounts receivable or non-recurring income from TerreStar Networks Inc. and TerreStar Corporation.

Earlier, on August 24, 2012 U.S. time the United States Bankruptcy Court formally approved TerreStar Corporation's motion for conditional settlement ("Settlement") with Elektrobit Inc., and TerreStar Corporation and certain of its preferred shareholders, of the various disputes between them in TerreStar Corporation Chapter 11 reorganization cases. The Settlement does not include the TerreStar Networks Inc. Chapter 11 cases, which remain pending, and does not include any distribution therefrom that may be available for EB. Information on the TerreStar Networks reorganization case and estimated distribution as well as uncertainties regarding the amount of the receivables and collecting the receivables are presented in the Company's Interim Report, published on August 7, 2012, under "Risks and Uncertainties" section.

On October 19, 2010, TerreStar Networks and certain other affiliates of TerreStar Corporation and on February 16, 2011, the parent company TerreStar Corporation filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code to strengthen their financial position. EB has asserted claims against each of the TerreStar entities in amounts totaling USD 27.9 million (EUR 22.3 million as per exchange rate of August 28, 2012).  Due to uncertainties related to the accounts receivable, EB booked an impairment of the accounts receivable in the amount of EUR 8.3 million during the second half of 2010.

Information on TerreStar Networks' and TerreStar Corporation's reorganizations are presented in the October 20 and 25, November 20 and December 30, 2010, February 17, and November 18, 2011, June 21, August 3,  and August 25, 2012 stock exchange releases as well as in EB's interim reports and financial statement at www.elektrobit.com.

Oulu, August 29, 2012

EB, Elektrobit Corporation
Jukka Harju
CEO

Further information:

Jukka Harju
CEO
Tel. + 358 40 344 5466

Päivi Timonen
CLO
Tel. +358 40 344 2794

Distribution:

NASDAQ OMX Helsinki
Principal media

EB, Elektrobit Corporation
EB creates advanced technology and turns it into enriching end-user experiences. EB is specialized in demanding embedded software and hardware solutions for wireless and automotive industries. The net sales for the year 2011 totaled MEUR 162.2. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com