Elektrobit Oyj - Company Announcement

TERRESTAR CORPORATION AND CERTAIN OF ITS PREFERRED SHAREHOLDERS FILED AN OBJECTION TO ELEKTROBIT CORPORATION'S CLAIMS IN THE REORGANISATION CASE OF TERRESTAR CORPORATION

STOCK EXCHANGE RELEASE

Free for publication on November 18, 2011, at 8.30 a.m. (CET+1)
TERRESTAR  CORPORATION  AND  CERTAIN  OF  ITS  PREFERRED  SHAREHOLDERS  FILED AN
OBJECTION  TO  ELEKTROBIT  CORPORATION'S  CLAIMS  IN  THE REORGANISATION CASE OF
TERRESTAR CORPORATION

EB  (Elektrobit Corporation)  has been  informed that  TerreStar Corporation and
certain  of  its  preferred  shareholders,  yesterday filed objections to claims
asserted  by EB's subsidiary,  Elektrobit Inc, in  the Chapter 11 reorganization
case  of  TerreStar  Corporation.  EB's  claims  are partly based on a guarantee
issued  by  TerreStar  Corporation  on  EB's  accounts receivable from TerreStar
Corporation's  subsidiary, TerreStar Networks Inc, and partly based on TerreStar
Corporation's  direct contractual obligations towards EB. The objection includes
a  request to  the United  States Bankruptcy  Court to  disallow the  portion of
claims  based on  the guarantee  and reduce  the portion  of claim  based on the
TerreStar Corporation's direct contractual obligations towards EB. Specifically,
the  objectors  seek  to  disallow  a  portion  of EB's claims against TerreStar
Corporation totaling approximately USD 25.5 million (including approximately USD
24.8 million  in obligations that  were guaranteed by  TerreStar Corporation and
USD  650,890 for  goods  supplied  to  and  payable by TerreStar Networks in due
course  on a  priority basis  in its  Chapter 11 liquidation  case), as  well as
claims  by EB for payment of attorneys' fees, costs and interest in unliquidated
amounts.

Under  the United States  Bankruptcy Code, with  limited exceptions a creditor's
filed  claim is presumed  to be valid  in the amount  filed unless another party
objects.  The filing of an objection commences a litigation process in which the
creditor is generally required to prove to the Bankruptcy Court the validity and
amount  of its claim.  Thus, due to the objection filed by TerreStar Corporation
and  the joint objection  filed by the  preferred shareholder group, EB's claims
will  be subject to litigation in the United States Bankruptcy Court. EB expects
to  vigorously  defend  its  claims  against  the  objections,  but  speculation
regarding the likely outcome of the dispute is premature at this time.

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.
Generally  in a Chapter 11 case,  any distribution of cash  or other assets by a
debtor  to satisfy pre-bankruptcy claims  of its creditors must  be made under a
Chapter  11 plan of  reorganization or  liquidation. As  part of  the process of
reconciling accounts in preparation for making distributions under a plan, often
Chapter  11 debtors (and occasionally  other parties in  interest) challenge the
amount  or validity of some creditor claims.  More particularly, in cases when a
proposed Chapter 11 plan is disputed, it is not uncommon for the debtor or other
plan  proponents to seek to  challenge the amount or  validity of the claim of a
creditor  who has objected  to the plan.  Here, EB has  lodged objections to the
proposed   plan   and   related  creditor  disclosures  submitted  by  TerreStar
Corporation  to the  Bankruptcy Court,  and the  parties objecting to EB's claim
have  scheduled the  hearing on  their objections  on January 10, 2012, the date
scheduled   for   a   hearing   on  TerreStar  Corporation's  proposed  creditor
disclosures.

On  November 17, 2011, EB's receivables from TerreStar amounted to approximately
USD  25.8 million (EUR 19.2 million as per exchange rate of November 17, 2011),
which  it has  claimed in  the Chapter  11 cases of  both TerreStar Networks and
TerreStar  Corporation.  In  addition  to  the  booked  receivables, EB has also
claimed  additional costs  in the  amount of  approximately USD 2.1 million (EUR
1.6 million  as per exchange rate of November 17, 2011) (at least) and resulting
mainly  from the ramp down of the business operations between the parties. Thus,
EB  has  asserted  claims  against  each  of  the  TerreStar entities in amounts
totaling  USD 27.9 million  (EUR 20.7 million  as per  exchange rate of November
17, 2011).  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 objection  now filed does not change the  current assumption that there will
be no further bookings of impairments of EB's accounts receivable from TerreStar
Networks  and TerreStar  Corporation and  therefore does  not affect EB's profit
outlook  for  the  second  half  of  2011. It  is  possible that, based on later
information  related  to  Chapter  11 cases  of TerreStar Networks and TerreStar
Corporation  and litigation on EB's claim,  the above-mentioned outlook may need
to  be  reconsidered.  Due  to  the  uncertainties  related  to  the  outcome of
reorganization  processes of  TerreStar Networks  and TerreStar Corporation, the
credit  risk may still grow during the  second half of 2011. Should the accounts
receivable  not be collected at all, either from TerreStar Networks or TerreStar
Corporation,  an impairment  loss and  costs related  to the  collection process
would  additionally  lower  EB's  operating  result  on a non-recurring basis by
approximately  EUR 10 million, at  maximum (USD-nominated items  as per exchange
rate  of  November  17, 2011). However,  this  would  not  have  any significant
negative effect on EB's cash flow.

Information  on TerreStar Networks'  and TerreStar Corporation's reorganizations
and  related risks  and uncertainties  are presented  in the October 20 and 25,
November  20, December 30, 2010, and February  17, 2011, stock exchange releases
as   well   as   in   EB's   interim   reports   and   financial   statement  at
www.elektrobit.com.


Oulu, November 18, 2011

EB, Elektrobit Corporation
Jukka Harju
CEO

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

Päivi Timonen
CLO
Tel. +358 40 344 2794

For further information on TerreStar Corporation and TerreStar Networks, please
see www.terrestar.com, www.TerreStarInfo.com and
www.terrestarcorprestructuring.com.

Distribution:
NASDAQ OMX Helsinki
Major 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 2010 totaled MEUR
161.8. Elektrobit      Corporation      is      listed     on     NASDAQ     OMX
Helsinki.www.elektrobit.com


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