GeoSentric Oyj - Company Announcement

FINANCING UPDATE AND REALLOCATION OF SHORT TERM FINANCING PREVIOUSLY RAISED

GEOSENTRIC OYJ      STOCK EXCHANGE RELEASE May 13, 2011 at 17:10 pm





FINANCING UPDATE AND REALLOCATION OF SHORT TERM FINANCING PREVIOUSLY RAISED



As previously announced on April 20, 2011, the Board has accepted and approved
a financing proposal from its lead investor (“Proposal”), which sets the terms
and conditions on which the lead investor is willing to commit to further
funding for the business of the Group. The Board further called an
Extraordinary General Meeting to be held on May 12, 2011 to confirm the Board's
approval of the Proposal. Due to the reasons explained in the stock exchange
release on May 12, 2011 the Board decided to cancel the meeting. For these same
reasons the Board has now discussed with the lead investor the implications of
this cancellation for the execution of the Proposal. 



According to the Proposal, the lead investor would 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 GHNV with approximately a 21% shareholding. The conversion of the Notes
would then be followed by a further capitalization of GHNV in the form of a
rights offering (“GHNV Offering”). As previously announced in order to raise
the required funds to participate in the GHNV Offering, the Company would need
to arrange a share issue (“GSOY Offering”). This GSOY Offering would attempt to
raise approximately €1.8M to invest in GHNV in order to maintain its pro-rata
shareholding and to cover the costs of the GSOY Offering and to secure
sufficient liquidity of the Company at least until mid-2012. If however, the
GSOY Offering was not successful the shareholding percentage of the Company in
GHNV would drop to 7%. 



Under the Proposal the lead investor has also undertaken to provide the Group
with short term financing of €600k in the form of new Notes issued by GHNV. As
of April 2011 the Company has already raised this. Pursuant to the terms of the
Proposal, this financing was allocated as follows: €250k to GHNV and its
subsidiaries providing this sub-group with financing through to the end of
April 2011 and €350k to the Company giving it adequate funding through Q2 2011.
Due to the cancellation of the Company's Extraordinary General Meeting to have
been held on May 12, 2011 and the subsequent delay in implementing the GHNV
Offering and GSOY Offering according to the Proposal, the Company has agreed
with its lead investor that there will be a re-allocation of the €600k short
term funds already raised in April. Part of the funds previously allocated to
maintaining the liquidity of the Company has now been allocated to GHNV and its
subsidiaries such that both GeoSentric and GHNV together with its subsidiaries
now have sufficient liquidity through to the end of May 2011. 



Following recent indications of interest by some of the largest shareholders,
the Company is discussing possible alternative or additional funding proposals
with the lead investor and a number of existing major shareholders within the
time limits allowed by the funds available. The Company is also discussing with
the lead investor a possible amendment to the implementation timetable of the
Proposal. The Company will update the market again when it has further clarity
on the outcome of these discussions. 



For the sake of clarity, the Company also wishes to emphasize that the lead
investor's right to convert its Notes into the shares of the Company or GHNV,
at its election, is not subject to any further approval or confirmation of the
Proposal. It is a right that the lead investor has based on the already
existing Notes, issued on terms and conditions approved by the Annual General
Meeting held on June 30, 2010. In the Extraordinary General Meeting, now
cancelled, the shareholders would have had the opportunity to confirm the
valuation applied to the conversion of the Notes. As the lead investor has the
right to convert the Notes at their discretion, another option for the Company
would now be seeking external confirmation for the valuation. It is now
engaging in discussions with the lead investor and a number of existing major
shareholders with regards to other possible financing proposals and the Board
is also obliged, whilst exploring these alternatives, to confirm the valuation
to be applied to the conversion of the Notes in case the lead investor decides
to exercise its right to convert. 



GeoSentric Oyj





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



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