Elektrobit Oyj - Company Announcement

TERRESTAR NETWORKS, A CUSTOMER OF EB (ELEKTROBIT CORPORATION), HAS FILED FOR REORGANIZATION TO STRENGTHEN FINANCIAL POSITION. EB HAS SIGNIFICANT RECEIVABLES FROM TERRESTAR NETWORKS.

STOCK EXCHANGE RELEASE

Free for publication on October 20, 2010, at 9:30 (CEST +1)

TERRESTAR NETWORKS, A CUSTOMER OF EB (ELEKTROBIT CORPORATION), HAS FILED FOR
REORGANIZATION TO STRENGTHEN FINANCIAL POSITION. EB HAS SIGNIFICANT RECEIVABLES
FROM TERRESTAR NETWORKS.

A   customer  of  EB's  (Elektrobit  Corporation)  subsidiary  Elektrobit  Inc.,
TerreStar   Corporation  (TerreStar),  has  yesterday  issued  a  press  release
according  to  which  its  majority-owned  subsidiary  TerreStar  Networks  Inc.
(TerreStar  Networks), which is also a  customer of Elektrobit Inc., and certain
other  affiliates  of  TerreStar  have,  in  order to strengthen their financial
position,  filed voluntary petitions for  reorganization under Chapter 11 of the
United  States  Bankruptcy  Code,  which  establishes a process for reorganizing
financially  troubled companies.  Under such  reorganization process, payment by
TerreStar Networks of amounts owed to its creditors will require approval by the
United   States   Bankruptcy   Court   and,  if  made  pursuant  to  a  plan  of
reorganization, an affirmative vote of TerreStar Networks' creditors. The timing
of  any such payment  cannot be predicted  with any degree  of certainty at this
time.

At  the moment, EB's receivables from TerreStar Networks amount to approximately
USD  25.7 million (EUR 18.5 million as per  exchange rate of October 19, 2010),
out  of which USD 24.2 million (EUR 17.5 million as per exchange rate of October
19, 2010) are  outstanding.  TerreStar  Networks'  court  filings  contain  only
limited   information   on   how  these  receivables  will  be  treated  in  the
reorganization.  Thus, potential implications of  TerreStar Networks' filing for
reorganization  on EB's profit, financial position  and outlook or the potential
implications  on the parties' business  relations cannot be currently evaluated.
Potential  implications on EB will be announced later when reasoned analysis can
be made. Based on EB's current understanding, there is no reason to believe that
EB  would not be able to collect at least most of the receivables in due course.
It  is  possible  that  based  on  later  information,  this view may need to be
reconsidered.  At  the  worst,  TerreStar  Networks'  reorganization process and
challenges in obtaining funding may also result in significant credit losses for
EB or even termination of the business relation should TerreStar Networks, in an
exercise  of its  business judgment  and with  Court approval, determine that it
will not comply with its contractual obligations towards EB as provided by EB.

According  to TerreStar's release, TerreStar Networks has, concurrently with the
filing  for reorganization, agreed on certain financing arrangements in order to
ensure  the maintaining of business-as-usual operations during the restructuring
process and to support expedited emergence from the reorganization process.

Since  2007 EB Inc, a  subsidiary of Elektrobit  Corporation (EB), and TerreStar
have  co-operated in development  of handset technologies  and reference designs
for  TerreStar's satellite-terrestrial  all-IP mobile  network.  The cooperation
has covered development of a dual-mode reference smartphone where EB acts as the
main  integrator and delivers product creation services to TerreStar. The above-
mentioned  receivables are  mainly related  to the  R&D co-operation between the
parties. At the end of 2009 the co-operation expanded as the parties agreed that
EB   will   also   have   manufactured  and  deliver  to  TerreStar  EB-designed
TerreStar(TM)   GENUS(TM)  smartphones.  In  September  TerreStar(TM)  GENUS(TM)
smartphone  received the  technical acceptance  in the  certification process of
mobile operator AT&T and is now available through AT&T on the USA market. EB has
sub-contracted  with Electronics Manufacturing  Services provider Flextronics to
manufacture the products to be delivered to TerreStar.

EB  has, in  its January-June  2010 Interim Report  released on August 6, 2010,
announced  that challenges  in obtaining  funding have  also resulted in payment
delays  by one of  EB's customers and  increased the risk  of credit losses. The
customer  referred  to  in  the  Interim  Report is TerreStar Networks.  EB will
release the January-September 2010 Interim Report on October 28, 2010.
Oulu, 20.10.2010
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.

Distribution:
NASDAQ OMX Helsinki
Principal media


EB, Elektrobit Corporation
EB  develops  advanced  technology  and  transforms  it  into enriching end user
experiences.   EB  specializes  in  demanding  embedded  software  and  hardware
solutions  for the automotive industry  and wireless technologies. The company's
net sales for the year 2009 totaled EUR 153.8 million. Elektrobit Corporation is
listed on the NASDAQ OMX Helsinki.www.elektrobit.com



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