GeoSentric Oyj - Notice to convene extr.general meeting

EXTRAORDINARY GENERAL MEETING OF GEOSENTRIC OYJ

GEOSENTRIC OYJ      STOCK EXCHANGE RELEASE August 16, 2011 at 16:15





EXTRAORDINARY GENERAL MEETING OF GEOSENTRIC OYJ





The Board of Directors of GeoSentric Oyj (“GeoSentric” or the “Company”) has
decided to convene an Extraordinary General Meeting of the shareholders on
Thursday, September 8, 2011 at 10:00 am. The Extraordinary General Meeting
shall be held at WTC Marskin Sali, Aleksanterinkatu 17, 00100 Helsinki. The
reception of notified registered shareholders will begin at 9:30 am. 





The following matters shall be handled in the meeting:



1. Confirming the terms of GeoSentric's participation in GeoSolutions Holdings
N.V.'s share offering and the key terms of the shareholders' agreement, and
approving the repayment of Convertible Bond Loan 2008-B 



1.1 Background



The Annual General Meeting (“AGM”) held on June 29, 2011 as extended to July 1,
2011 decided to confirm the approval of the lead investor's financing proposal
(“Proposal”) dated April 12, 2011. As announced immediately after the AGM, a
group of Company's largest shareholders had reached an in-principle agreement
on the manner in which the Proposal would be implemented. The final agreement
was reached on August 3, 2011 and announced to the markets on August 4, 2011.
The agreed terms were implemented in a Subscription and Shareholders Agreement
of GeoSolutions Holdings N.V. (“Agreement”) that was made between the Company,
GeoSolutions Holdings N.V. (“GHNV”) and the lead investor. The Agreement,
amongst other things, provides the Company with additional minority shareholder
rights protection in respect of its ownership of GHNV and provides for the lead
investor to fully subscribe for an initial €750,000 in the first tranche of the
GHNV share offering to GHNV shareholders (“GHNV Offering”). This first tranche
will secure the Company's and GHNV's cash needs until the end of September
2011. The main terms of the Agreement are attached to the Board's proposal
published on the Company's website. 



1.2 Financing arrangements and implementing the Proposal



As confirmed by the AGM and agreed in the Agreement, the lead investor
converted their preferred convertible notes issued by GHNV (“Notes”) together
with the accrued interest into the shares of GHNV. The conversion (“First
Closing”) was announced to the markets on August 8, 2011. As a result GHNV
ceased to be a subsidiary of the Company and the Company's holding of GHNV
after conversion was approximately 20%. The conversion took place at an implied
price per share of €1.03, which corresponds to the conversion price confirmed
by the AGM and is supported by the KPMG Fairness Opinion disclosed by the
Company to the markets on June 23, 2011. 



In order to secure sufficient liquidity of GHNV, GHNV shall make a share
offering to its shareholders, being the lead investor with their approximately
80% ownership and the Company with its approximately 20% ownership, as part of
the financing plan agreed in the Agreement. The GHNV Offering shall be arranged
in two tranches and the share subscription price shall be 0.103€, which is
equivalent to a 90% discount to the implied price used in the conversion of the
Notes. The first tranche of €750,000 directed to the lead investor (“Second
Closing”) was executed on August 10, 2011 in order to secure the short-term
funding needs of both GHNV and the Company. GHNV paid €150,000 of this
financing to the Company as a fee in accordance with the terms of the
Agreement. This secured the cash requirements of the Company and GHNV until the
end of September 2011. As a result of the Second Closing, Company's holding in
GHNV decreased to just above 15%. 



The second tranche of the GHNV Offering (“Third Closing”) is agreed to be
executed on 14 October 2011 at the latest. In this second tranche GHNV shall
raise €2m directed equally to the lead investor and the Company, each being
entitled to subscribe for new GHNV shares for the amount of €1m. In order to
participate in the GHNV Offering, the Company intends to arrange a directed
share issue (“GSOY Offering”) to its largest shareholders to be executed by the
end of September 2011. In the event the GSOY Offering is successful and the
Company subscribes all the shares offered to it in the second tranche of the
GHNV Offering (“Third Closing B”), the Company's shareholding in GHNV would
increase to approximately 24% after the repayment of Convertible Bond Loan
2008-B according to section 1.3 below. However, if the GSOY Offering was not
successful and the Company did not participate in the GHNV Offering to its full
entitlement (“Third Closing A”), its holding in GHNV could decrease to
approximately 9% depending on the extent of the Company's actual participation
in the second tranche of the GHNV Offering. In this case the lead investor has
agreed to underwrite the balance of the the second tranche of the GHNV Offering
not funded by the Company and subscribe for up to the full €2m itself to secure
sufficient funding of both GHNV and the Company. 



Immediately after receiving the €2m raised in the second tranche of the GHNV
Offering, GHNV shall pay an additional €350,000 to the Company, completing the
agreed €500,000 funding to the Company when taken together with the already
received €150,000. It has been agreed in the Agreement that in the event the
Company participates in the second tranche of the GHNV Offering with the full
€1m amount, this €500,000 financing shall be held as a non-repayable fee to the
Company. However, if the Company does not participate in the second tranche of
the GHNV Offering with the full €1m amount, and the lead investor is required
to make an additional investment based on their underwriting, then this
€350,000 payment together with the already received €150,000 shall both be
considered as a subordinated and unsecured loan from GHNV to the Company. 



1.3 Repayment of Convertible Bond Loan 2008-B



In the event of a successful GSOY Offering and the Company's full participation
in the second tranche of the GHNV Offering, i.e. after the Third Closing B, the
lead investor has agreed to offer the Company an opportunity to repay its €10m
Convertible Bond Loan 2008-B (“CBL 2008-B”) together with the accrued interest
by transferring an agreed amount of GHNV shares held by the Company to the lead
investor. The agreed amount of shares to be transferred as consideration for
full repayment of the €10m CBL 2008-B implies a redemption value of
approximately €243,000 at the issue price applied to the GHNV Offering. After
the repayment the Company would still hold approximately 24.3% of GHNV. In
connection with the repayment of CBL 2008-B the lead investor has also agreed
to release the security it holds over the assets of the Company and GHNV and
all the previous financing agreements made between the parties on June 30, 2010
would be terminated. In exchange the lead investor would receive first priority
to the first €5m received from any potential future sale or liquidation of
GHNV, any exceeding amount being distributed to all GHNV shareholders pro rata
to their shareholdings. 



The Board has considered this offered repayment proposal and concluded it to be
favorable to the Company and its shareholders, releasing the Company from a
major liability it may not be able to repay otherwise. 



1.4 Other key terms of the Agreement



The other key terms of the Agreement contain the following main provisions and
minority protection rights: 



  -- The Company is entitled to nominate two members to the GHNV Board if it
     owns more than 20% of GHNV shares and one member as long as it owns at
     least 15% of GHNV shares. If the Company's holding is less than 15%, it is
     entitled to appoint an observer to attend GHNV Board meetings as long as it
     owns at least 7% of GHNV shares.
  -- The Company is entitled to participate in all future GHNV fund raising and
     share issues pro rata to its ownership in GHNV.
  -- After the Third Closing GHNV will create and allocate an option pool of 15%
     to be allocated to the Board and senior management of GHNV.
  -- The Company's approval is required to change GHNV's Articles of Association
     in a way that would adversely affect Company's shareholder rights or to
     deviate from the pre-emptive right of shareholders as long as the Company
     owns at least 15% of GHNV shares. The lead investor on the other hand has
     the approval right on all major decisions and changes in the business
     operations and management of GHNV.
  -- The Company has agreed information rights, including the right to receive
     financial information in a timely manner.
  -- The Company has the right of first refusal in the event that the lead
     investor wishes to sell its GHNV shares and the lead investor has the same
     right in the event the Company wishes to sell its GHNV shares. The Company
     also has a co-sale right (tag-along right) on the same terms with the lead
     investor in the event that the lead investor wishes to sell its GHNV shares
     and the Company decides not to use its right of first refusal. In that
     case, where the Company has decided not to use its right of first refusal,
     the lead investor also has the right to enforce the sale of the Company's
     GHNV shares on the same terms (drag-along right).
  -- The Company has been secured funding of €500,000 from GHNV, which will be
     considered either as a non-repayable fee or a subordinated and unsecured
     loan depending on the outcome of the GSOY Offering and participation in the
     GHNV Offering by the Company.



The above listed key terms significantly extend the minority rights that the
Company otherwise would have had under the Proposal and Dutch law and do not
waive any rights the Company has under the law as a minority shareholder of
GHNV. 



1.5 Other planned arrangements



If the CBL 2008-B is repaid as explained above, then the only outstanding loan
the Company has would be the remaining part of approximately €113,000 of the
Convertible Bond Loan 2004A (“CBL 2004A”). According to its original terms the
CBL 2004A was convertible into the shares of the Company at an implied price of
€0.01 per share. The conversion period expired on December 31, 2008. As CBL
2004A is a capital loan the Company may repay it only from unrestricted
shareholders' equity. Considering the current amount of confirmed cumulative
losses this will not be achievable for a long period of time. The Board has
concluded it to be beneficial for the Company to have the remaining CBL 2004A
capital converted into the shares of the Company according to the original
conversion terms. Therefore the Board has made an offer to the holders of these
remaining CBL 2004A notes to issue special subscription rights against
surrendering the notes back to the Company so that they would receive the same
amount of shares as if they converted their notes according to the original CBL
2004A terms. If the note holders accept the offer the Board will issue the
required amount of special subscription rights to these note holders by virtue
of the authorization granted to it by the AGM held on June 29, 2011 and as
extended to July 1, 2011. 



1.6 Proposal



The Board proposes that the Extraordinary General Meeting would:



  -- Confirm the terms of Company's participation in the second tranche of the
     GHNV Offering (Third Closing) as explained in section 1.2 above,
  -- Approve the repayment of CBL 2008-B as explained in section 1.3 above, and
  -- Confirm the key terms of the Agreement as explained in section 1.4 above.





Documents of the Extraordinary General Meeting



The above proposals by the Board of Directors, this notice to the Extraordinary
General Meeting and other documents required to be kept available pursuant to
the Companies Act and the Securities Market Act are available on GeoSentric
Oyj's website at www.geosentric.com and at the Company's office in Salo, at the
address Meriniitynkatu 11, 24100 Salo, Finland from August 16, 2011 onwards. 



The proposals by the Board of Directors are also available at the Extraordinary
General Meeting, and copies of them as well as this notice will be sent to
shareholders on request. 



Total number of shares and votes



On August 16, 2011, the date of the invitation to the Extraordinary General
Meeting, GeoSentric Oyj had 924,656,354 shares, which are all of the same
series. Each share entitles its owner to 1 vote and accordingly the total
number of votes by all shares is 924,656,354. 



Right to participate



a) Shareholders registered in shareholders' register



A shareholder, who has been registered in the Company's shareholder register,
maintained by the Euroclear Finland Ltd, on August 29, 2011 has the right to
participate in the Extraordinary General Meeting. 



b) Holders of nominee registered shares



A holder of nominee registered shares has the right to participate in the
Extraordinary General Meeting by virtue of such shares, based on the record
date of the General Meeting, i.e. on August 29, 2011 at 10:00 a.m., and would
be entitled to be registered in the shareholders' register of the Company held
by Euroclear Finland Ltd. In order to attend the Extraordinary General Meeting,
shareholders who hold their shares under a name of a nominee must contact their
custodian to be temporarily recorded in the shareholder register and the
recording must be made effective no later than September 5, 2011 at 10.00 am
(Finnish time, GMT +2hrs). As regards nominee registered shares this
constitutes due registration for the Extraordinary General Meeting 



A holder of nominee registered shares is advised to request without delay
necessary instructions regarding the registration in the shareholder's register
of the Company, the issuing of proxy documents and registration for the
Extraordinary General Meeting from his/her custodian bank. The account
management organization of the custodian bank will register a holder of nominee
registered shares, who wants to participate in the meeting, into the temporary
shareholders' register of the Company at the latest by the time stated above. 



Notice of participation



Shareholders that wish to participate in the Extraordinary General Meeting must
notify its/his/her participation by September 5, 2011 at 12.00 at the latest to
Company's head office by telephone +358 (0)20 7700800 (Minna Suokas), by
telefax at +358 (0)2 7332633, in writing to GeoSentric Oyj, PL 84, 24101 Salo,
Finland, or by email to msuokas@gypsii.com. Proxies are requested to be
delivered by the end of the above registration period. 



Proxy representative and powers of attorney



Shareholders may participate in the Extraordinary General Meeting and exercise
their rights at the meeting by proxy representatives. 



The proxy representative of a shareholder must present a dated proxy document
or give other reliable proof that he/she is entitled to represent the
shareholder. If the shareholder participates in the Extraordinary General
Meeting by several proxy representatives who represent the shareholder with
shares on separate securities accounts, the shares with which each
representative represents the shareholder shall be notified in connection with
the registration. 



Any proxy documents should be delivered as originals to the address GeoSentric
Oyj, PL 84, 24101 Salo, Finland to the attention of Ms. Minna Suokas, before
the above registration period expires. 



Right to request information



Pursuant to Chapter 5, Section 25 of the Companies Act, shareholders present at
the Extraordinary General Meeting have the right to request information on
matters dealt with by the meeting. 





GEOSENTRIC OYJ



Board of Directors



Distribution:

NASDAQ OMX Helsinki

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