Elektrobit Group Oyj - TERRESTAR CORPORATION, THE PARENT COMPANY OF EB (ELEKTROBIT CORPORATION)'S CUSTOMER TERRESTAR NETWORKS ALREADY IN A CHAPTER 11 CASE, HAS FILED FOR REORGANIZATION. EB HAS SIGNIFICANT RECEIVABLES FROM T
February 17, 2011
TERRESTAR CORPORATION, THE PARENT COMPANY OF EB (ELEKTROBIT CORPORATION)'S CUSTOMER TERRESTAR NETWORKS ALREADY IN A CHAPTER 11 CASE, HAS FILED FOR REORGANIZATION. EB HAS SIGNIFICANT RECEIVABLES FROM T
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Free for publication on February 17, 2011, at 11:00 a.m. (CET+1)
TERRESTAR CORPORATION, THE PARENT COMPANY OF EB (ELEKTROBIT CORPORATION)'S CUSTOMER TERRESTAR NETWORKS ALREADY IN A CHAPTER 11 CASE, HAS FILED FOR REORGANIZATION. EB HAS SIGNIFICANT RECEIVABLES FROM TERRESTAR.
EB (Elektrobit Corporation) has been informed that a customer of EB's subsidiary Elektrobit Inc., TerreStar Corporation (TerreStar), yesterday filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code. TerreStar is the parent company of Elektrobit Inc's customer TerreStar Networks Inc (TerreStar Networks) that has previously filed a petition for corresponding reorganization. Chapter 11 of the United States Bankruptcy Code establishes a process for reorganizing financially troubled companies. On February 15, 2011, EB's outstanding receivables from TerreStar Networks amounted to approximately USD 25.8 million (EUR 19.1 million as per exchange rate of February 15, 2011).
EB announced on November 20, 2010 that it had initiated legal proceedings against TerreStar to claim repayment of its receivables from TerreStar. The claim is partly based on a guarantee issued by TerreStar of EB's accounts receivables from TerreStar Networks and partly based on TerreStar's direct contractual obligations towards EB. The legal proceedings brought by EB against TerreStar in order to collect the amounts owed to EB have now been stayed pursuant to United States bankruptcy law. It is EB's understanding that EB can assert the claim in the reorganization case now commenced.
In the given timeframe it has not been possible to thoroughly examine TerreStar's court filings. Potential implications on collecting the amounts owed to EB and on EB's profit, financial position and outlook will be announced later when a reasoned analysis can be made.
Uncertainties regarding TerreStar Networks' filing for reorganization and collecting the receivables from TerreStar Networks and TerreStar have been presented under the "Risks and Uncertainties" section of the EB's Financial statement bulletin 2010 published today, on February 17, 2011. Information on the development of TerreStar Networks' filing for reorganization and EB's initiated legal proceedings against TerreStar are presented in the October 20 and 25, November 20, and December 30, 2010 stock exchange releases at www.elektrobit.com .
Oulu, 17.2.2011
EB, Elektrobit Corporation
Jukka Harju
Chief Executive Officer
Further information:
Jukka Harju
Chief Executive Officer
Tel +358 40 344 5466
For further information on TerreStar and TerreStar Networks, please see www.terrestar.com and www.TerreStarInfo.com.
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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 2010 totaled MEUR 161.8. Elektrobit Corporation is listed on NASDAQ OMX Helsinki. www.elektrobit.com
