GeoSentric Oyj - Company Announcement

FINANCING UPDATE, AGREEMENT REACHED BETWEEN MAJOR SHAREHOLDERS AND LEAD INVESTOR

GEOSENTRIC OYJ      STOCK EXCHANGE RELEASE August 4, 2011 at 16:30





FINANCING UPDATE, AGREEMENT REACHED BETWEEN MAJOR SHAREHOLDERS AND LEAD INVESTOR



The Company has previously announced on July 20, 2011 that it had raised
sufficient finance to sustain group operations to the end of July and that
discussions were continuing between the lead investor and a group of the
Company's largest shareholders concerning a financing package. The Company can
confirm that agreement has now been reached between the lead investor and this
group of the Company's largest shareholders concerning the manner of execution
of the previously published lead investor's financing proposal dated April 12,
2011 (the “Proposal”), introducing some possible changes to the terms of the
Proposal, and the planned support and participation of this group of largest
shareholders in this planned financing. The Company intends to call an
Extraordinary General Meeting (“EGM”) of shareholders to approve certain
aspects of the financing package and full details of the package will be
released in the EGM call in the next few days. 



The first part of the Proposal, which was approved at the Company's Annual
General Meeting on June 29, 2011 as extended to July 1, 2011, is in the process
of being implemented. This involves the lead investor converting its existing
preferred convertible notes (“Notes”) plus interest as issued by the Company's
currently wholly owned subsidiary, GeoSolutions Holdings N.V. (“GHNV”) into the
shares of GHNV. The conversion leaves the Company as a minority shareholder in
GHNV with approximately a 20% shareholding. This conversion of Notes will be
followed by further capitalizations of GHNV in a form of rights offerings
(“GHNV Offerings”), which would lead to the Company's ownership in GHNV
becoming approximately 24 % if the Company secures shareholder approval for the
required elements of the financing package and participates in the GHNV
Offering to its agreed share in full, corresponding to an investment of
approximately €1m. To raise the required funds to participate in a GHNV
Offering, the Company intends to arrange a share issue (“GSOY Offering”). In
the event the Company did not participate in the GHNV Offering, this would lead
to further dilution of Company's ownership in GHNV down to an approximate 9 %
holding in GHNV. The GHNV Offering shall be executed in two tranches. The
financing package includes also conditions for repayment of the Loan Note 2008
issued by GeoSentric. The repayment is conditional on EGM approval. 



The lead investor, GHNV and the Company have entered into a Subscription and
Shareholders Agreement which, 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 an initial GHNV Offering which will secure the Company's and GHNV's
cash runway until the end of September 2011. It is expected that the GSOY
Offering can be completed by this time and that a further GHNV Offering will
then be subscribed, which will secure both the Company's and GHNV's cash
requirements until Q3 2012. 



Full details of the financing package will be released in the next few days
with the EGM call. 



GeoSentric Oyj



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



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