GeoSentric Oyj - Company Announcement

FINANCING UPDATE, PROPOSAL FOR SHORT-TERM FINANCING RECEIVED, PROPOSING HIGH DILUTION AND LOSING CONTROL OVER GYPSII ASSETS

GEOSENTRIC OYJ        STOCK EXCHANGE RELEASE March 25, 2011 at 9.30





FINANCING UPDATE, PROPOSAL FOR SHORT-TERM FINANCING RECEIVED, PROPOSING HIGH
DILUTION AND LOSING CONTROL OVER GYPSII ASSETS 



The Company announced on March 14, 2011 that it has received preliminary
proposal for short-term financing from its lead investor. As informed, the
preliminary terms indicated lead investor's willingness to convert its existing
preferred convertible notes (“Notes”) issued by GeoSolutions Holdings N.V.
(“GHNV”) into the shares of GHNV, leaving the Company as a minority shareholder
in the GHNV. 



The Company has now received the official proposal (“Proposal”) from its lead
investor. The Proposal sets the terms and conditions on which the lead investor
is willing to commit to further funding for the business. According to the
Proposal the lead investor would convert the Notes into the shares of GHNV,
receiving over 3/4 ownership of GHNV. The conversion of Notes would be followed
by further capitalization of GHNV at low valuation, which would lead into
further dilution of Company's ownership in GHNV. 



The Proposal also indicates that a limited amount of the additional funds made
available to GHNV could be used to finance the Company's operating costs
through the period until the conversion of the Notes into GHNV shares. Any
subsequent additional funding to guarantee sufficient liquidity of the Company
in the long term should be received from its shareholders. 



The Board of the Company has preliminary handled the Proposal and concluded
that there are several aspects in the Proposal that require further
clarification to conclude if the Proposal guarantees sufficient funding for the
Company to satisfy its existing and future liabilities. If that was not the
case then, as one of the options, the Board would need to consider filing an
application for immediate bankruptcy. The Company is engaged in intensive
discussions with the lead investor to get clarity on these points as soon as
practically possible. 



The Company wishes to remind that it currently does not have sufficient working
capital to finance its operations after the Q1 2011 unless it gets into
agreement on the terms of short-term financing with the lead investor. The
Company is also planning to call an Extraordinary General Meeting to decide on
the Proposal as soon as it gets further clarity on the open issues relating to
the sufficient funding for the Company. 





GeoSentric Oyj





For more information, please contact: investors@gypsii.com



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NASDAQ OMX Helsinki

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