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
[HUG#1636864]
ELEKTROBIT CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION
| Source: Bittium Oyj