Elektrobit Oyj - Company Announcement

EB (ELEKTROBIT CORPORATION) WILL BOOK A STATUTORY PROVISION OF 8.3 MILLION EUROS DUE TO RISK OF LOSING RECEIVABLES FROM ITS CUSTOMER TERRESTAR NETWORKS, PROVIDE ADVANCE INFORMATION ON JANUARY-SEPTEMBE

STOCK EXCHANGE RELEASE

Free for publication on October 25, 2010, at 7:15 pm (CEST +1)

EB (ELEKTROBIT CORPORATION) WILL BOOK A STATUTORY PROVISION OF 8.3 MILLION EUROS
DUE TO RISK OF LOSING RECEIVABLES FROM ITS CUSTOMER TERRESTAR NETWORKS, PROVIDE
ADVANCE INFORMATION ON JANUARY-SEPTEMBER RESULT AND LOWER ITS SECOND HALF PROFIT
ESTIMATE

EB  (Elektrobit Corporation) has  resolved to book  a statutory provision in the
amount  of  EUR  8.3 million  related  to  receivables  owed  to  its subsidiary
Elektrobit  Inc. by  its customer  TerreStar Networks  Inc. (TerreStar Networks)
that  has  filed  for  reorganization.  EB  informed  on  October  20, 2010 that
TerreStar  Networks  has  filed  voluntary  petitions  for  reorganization under
Chapter 11 of the U.S. Bankruptcy Code.

According  to advance information, EB's net sales during January-September 2010
increased  by 5.5 per cent  to EUR 119.9 million  (EUR 113.7 million in January-
September  2009). Operating  loss  was  EUR  -9.7  million  (EUR -1.9 million in
January-September  2009). Net sales  during July-September  2010 amounted to EUR
33.7 million (EUR 33.5 million, 3Q 2009), representing an increase of 0.6% year-
on-year.  Operating loss during  July-September 2010 was EUR  -11.5 million (EUR
-0.8 million, 3Q 2009). The booked statutory provision in the amount of EUR 8.3
million is included in the abovementioned operating loss figures.

TerreStar  Networks'  court  filings  with  the  United  States Bankruptcy Court
contain  only limited information on how EB's receivables will be treated in the
reorganization. Further, TerreStar Networks' court filings do not contain a plan
of  reorganization, which EB  anticipates will be  presented for the approval of
creditors  and  the  Court  later  in  the  bankruptcy  case.  After  subsequent
discussions  on the matter, EB has resolved  to make the statutory provision due
to  uncertainty as to how the receivables will be treated in the reorganization.
Also, due to its customer's reorganization process, EB has lowered its Terrestar
Networks  related net sales  estimates for the  last quarter of 2010. More exact
implications  for  the  parties'  future  business relations cannot be currently
evaluated.

Considering the current estimated implications of TerreStar Networks' filing for
reorganization  on EB's  profit and  financial position  in the third quarter of
2010, as  well as on the outlook for  the parties' business relations during the
last  quarter, EB  expects that  net sales  for the  second half of 2010 will be
higher  than in the second half  of 2009 (EUR 73.6 million) and operating profit
for the second half of 2010, without the statutory provision of EUR 8.3 million,
will  be clear lower than the operating  profit for the second half of 2009 (0.0
million).  The  weakening  operating  profit  level  is  mainly  due  to lowered
Terrestar  Networks related net  sales estimates. It  is possible that, based on
later  information related  to TerreStar  Networks' reorganization, this outlook
may need to be reconsidered.

Earlier  EB had expected that the net sales for the second half of 2010 would be
higher than in the second half of 2009 (EUR 73.6 million) and that the operating
profit  for the second half of 2010 would be  at the level of or better than the
operating  profit  for  the  second  half  of 2009 (EUR 0.0 million). Due to the
holiday  period and  the nature  of R&D  services business  the third quarter of
2010 was estimated to be weaker than the fourth quarter of 2010.

Based on EB's current understanding, there is no reason to believe that EB would
not  be  able  to  collect  in  due  course  at  least that portion of TerreStar
Networks'  receivables that exceed  the amount of  the above-mentioned statutory
provision.  It is possible that, based on  later information, this view may need
to  be reconsidered.  At  worst, TerreStar Networks'  reorganization process and
challenges  in obtaining funding may 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.

Despite  the above mentioned statutory provision  EB aims to collect the amounts
owed  to it by TerreStar Networks in  full. At the moment, EB's receivables from
TerreStar Networks amount to approximately USD 25.9 million (EUR 18.6 million as
per exchange rate of October 22, 2010), out of which USD 24.2 million (EUR 17.4
million as per exchange rate of October 22, 2010) are outstanding.

As  informed  by  EB  on  October  20, 2010 TerreStar Networks and certain other
affiliates  of  TerreStar  Corporation  have  based  on information published on
October  19, 2010, in  order  to  strengthen  their  financial  position,  filed
voluntary  petitions for  reorganization under  Chapter 11 of  the United States
Bankruptcy  Code. TerreStar Networks is  a majority-owned indirect subsidiary of
TerreStar  Corporation. 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. It is also possible that the
payment  of receivables will be done partly or wholly in a form of shares in the
reorganized  company or in  the form of  other securities entitling creditors to
obtain  shares.  The  form or  timing of  any such  payment of  EB's receivables
cannot be predicted with any degree of certainty at this time.

EB will release the January-September 2010 Interim Report on October 28, 2010.


Oulu, 25.10.2010
EB, Elektrobit Corporation
Board of Directors

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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