Elektrobit Oyj - Company Announcement

THE COURT APPROVED THE CONDITIONAL SETTLEMENT BETWEEN EB'S, ELEKTROBIT CORPORATION, SUBSIDIARY, ELEKTROBIT INC. AND TERRESTAR CORPORATION AND CERTAIN OF ITS PREFERRED SHAREHOLDERS IN THE REORGANIZA...

STOCK EXCHANGE RELEASE
Free for publication on August 25, 2012, at 0.15 a.m. (CEST+1)
THE   COURT   APPROVED  THE  CONDITIONAL  SETTLEMENT  BETWEEN  EB'S,  ELEKTROBIT
CORPORATION,  SUBSIDIARY, ELEKTROBIT INC. AND  TERRESTAR CORPORATION AND CERTAIN
OF   ITS   PREFERRED  SHAREHOLDERS  IN  THE  REORGANIZATION  CASE  OF  TERRESTAR
CORPORATION

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., a subsidiary of EB, Elektrobit Corporation
("EB"),  and TerreStar Corporation and certain of its preferred shareholders, of
the   various  disputes  between  them  in  TerreStar  Corporation  Chapter  11
reorganization  cases. Further, the Bankruptcy Court approved the motion for new
financing  to enable TerreStar Corporation to  satisfy its obligations under the
approved  Settlement. Based  upon the  Court approval,  TerreStar Corporation is
obligated to pay to Elektrobit Inc., within two business days, an immediate cash
payment  of USD  13.5 million (EUR  10.8 million as  per exchange rate of August
23, 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  reorganization cases. Upon
receipt by Elektrobit Inc. of the Settlement Payment, certain mutual releases of
liability  and other  agreements set  forth in  the now approved Settlement will
become  effective. EB understands that  TerreStar Corporation does not presently
have  funds available to make  the Settlement Payment, but  intends to use funds
that  it  expects  to  receive  from  the  now-approved financing to satisfy its
obligations under that Settlement. The Settlement does not include the TerreStar
Networks  Chapter  11 cases,  which  remain  pending,  and  does not include any
distribution therefrom that may be available for EB.

The implications of the TerreStar Corporation and TerreStar Networks Chapter 11
cases  on EB's profit, financial position  and outlook can be finally determined
only  when the outcome  of both Chapter  11 cases is known,  including all costs
related  to collecting  the receivables,  and e.g.  confirmed tax  treatment. If
received by Elektrobit Inc., the Settlement Payment in the TerreStar Corporation
Chapter  11 cases alone, and without any further distribution from the TerreStar
Networks  Chapter 11 cases, would result a  positive effect of approximately USD
1.6 million  (EUR 1.3 million as  per exchange rate  of August 23, 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 23, 2012). If
TerreStar  Corporation  receives  the  approved  new  financing,  the Settlement
Payment would be paid within two business days after the Settlement, i.e. during
the third year quarter of 2012.

EB  expects that the  Settlement Payment will  not be made  unless and until the
approved  funding is  actually received  by TerreStar  Corporation. In the event
that  the funding is not received by TerreStar Corporation, nothing contained in
the  Settlement shall be deemed to be a  waiver of any claims or an admission of
liability  by any party thereto  and, in such event,  all rights and remedies of
the parties shall be preserved.

The  now approved Settlement does not include the TerreStar Networks Chapter 11
cases or 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 23, 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, and August 3, 2012 stock exchange
releases  as  well  as  in  EB's  interim  reports  and  financial  statement at
www.elektrobit.com.

Oulu, August 25, 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#1636279]