Elektrobit Oyj - Company Announcement

Elektrobit Corporation's subsidiary, Elektrobit Inc. received the settlement payment in the liquidation case of TerreStar Networks Inc.

Stock exchange release

Free for publication on August 29, 2014 at 12.05 p.m. (CEST+1)

Elektrobit  Corporation's  subsidiary,  Elektrobit  Inc. received the settlement
payment in the liquidation case of TerreStar Networks Inc.

On  August 28, 2014, U.S. time, Elektrobit Inc. (EB), a subsidiary of Elektrobit
Corporation,  received a cash  payment of USD  1,075,000 (EUR 0.8 million as per
exchange  rate of August 28, 2014) (the "Settlement  Payment") in full and final
satisfaction  of  its  claim  against  TerreStar  Networks  Inc.  ("TSN") and in
resolution of all disputes between EB and The Liquidating Trust (the "Trust") of
TSN, which was formed in connection with TSN's Bankruptcy Court-approved Chapter
11 liquidation  plan (the "Plan"). Upon receipt by EB of the Settlement Payment,
certain  mutual  releases  of  liability  and  other agreements set forth in the
Settlement  (as defined below) have become effective, and it is anticipated that
EB's participation in the TSN Chapter 11 cases is concluded.

The  Settlement  Payment  will  result  in  a  non-recurring  positive effect of
approximately EUR 0.8 million on Elektrobit Corporation's operating result and a
positive  effect on Elektrobit Corporation's cash flow of approximately EUR 0.8
million  on  the  third  quarter  2014. This  payment supplements a USD 650,890
distribution  received by EB under  the Plan in March,  2012, on that portion of
its claim entitled to payment priority under U.S. bankruptcy law.

Earlier,  on  August  12, 2014 U.S.  time  the  United  States  Bankruptcy Court
formally  approved the  motion seeking  approval of  a conditional  agreement of
settlement  (the "Settlement") between EB and  the Trust of the various disputes
between  EB and the bankruptcy estate of TSN and certain of its subsidiaries and
affiliates.

The  Settlement  follows  a  settlement  previously  entered into between EB and
TerreStar Corporation ("TSC") and certain of its preferred shareholders in TSC's
Chapter   11 reorganization  cases.  Pursuant  to  that  settlement,  on  August
28, 2012 TSC  made a cash payment to Elektrobit Inc. of USD 13.5 million in full
and  final  satisfaction  of  EB's  claim  against  that  entity and the parties
exchanged  mutual  releases.  That  settlement  did  not include TSN and did not
include any distribution from the TSN Chapter 11 cases.

EB   had   asserted  claims  for  its  accounts  receivable  in  the  amount  of
approximately  USD 25.8 million (EUR 19.6 million as per exchange rate of August
28, 2014) in  the Chapter 11 cases of its  customers TSN and its parent company,
TSC,  filed in 2010 and 2011. In addition to the booked receivables, EB asserted
claims  for additional costs in the amount of approximately USD 2.1 million (EUR
1.6 million  as per exchange rate of  August 28, 2014) resulting mainly from the
ramp  down of  the business  operations between  the parties.  Thus, EB asserted
claims  against each  of the  TerreStar entities  in amounts  totaling USD 27.9
million  (EUR  21.2 million  as  per  exchange  rate of August 28, 2014). 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.

The  full  implications  of  the  TSN  and  TSC Chapter 11 cases on EB's profit,
financial  position  and  outlook  can  be  finally  determined only when EB has
accounted  for  all  costs  related  to  collecting  the receivables and the tax
treatment of its receivables is confirmed. As more fully discussed in Elektrobit
Corporation's  interim reports and financial statement at www.elektrobit.com, EB
has appealed a ruling by the U.S. Internal Revenue Service ("IRS") disallowing a
deduction  taken on EB's 2010 U.S. federal  income tax return for the impairment
of the receivables from the TerreStar companies. The appeal is presently pending
before the IRS Office of Appeals.
Oulu, August 29, 2014

Elektrobit Corporation
Jukka Harju
CEO

Further information:
Jukka Harju
CEO
Tel. +358 40 344 5466

Distribution:
NASDAQ OMX Helsinki
Principal media

Elektrobit Corporation (EB)
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  in 2013 totaled EUR 199.3
million  and  operating  profit  was  EUR 8.1 million. Elektrobit Corporation is
listed on NASDAQ OMX Helsinki. www.elektrobit.com

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