Elektrobit Oyj - Company Announcement

ELEKTROBIT CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION

STOCK EXCHANGE RELEASE
Free for publication on August 29, 2012, at 12.30 a.m. (CEST+1)
ELEKTROBIT  CORPORATION (EB) SUBSIDIARY, ELEKTROBIT INC. RECEIVED THE SETTLEMENT
PAYMENT OF USD 13.5 MILLION IN THE REORGANIZATION CASE OF TERRESTAR CORPORATION

On  August 28, 2012 U.S. time,  Elektrobit Inc., a  subsidiary of EB, Elektrobit
Corporation,  received a cash  payment of USD  13.5 million (EUR 10.8 million as
per  exchange rate  of August  28, 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
Chapter  11 reorganization  cases  under  United  States  Bankruptcy  Code. Upon
receipt by Elektrobit Inc. of the Settlement Payment, certain mutual releases of
liability  and other  agreements set  forth in  the now approved Settlement have
become  effective.  Except  insofar  as,  pursuant  to the terms of the parties'
agreement,  Elektrobit  Inc.  has  agreed  to  support  the  Chapter  11 plan of
TerreStar  Corporation,  it  is  anticipated  that  EB's  participation  in  the
TerreStar Corporation Chapter 11 cases is concluded.

The  Settlement Payment in the TerreStar Corporation Chapter 11 cases alone, and
without  any further distribution from  the TerreStar Networks Chapter 11 cases,
will  result a positive effect of approximately USD 1.6 million (EUR 1.3 million
as per exchange rate of August 28, 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 28, 2012) during  the third quarter of 2012. Having
now  received  the  Settlement  Payment,  EB  expects  no  further recovery from
TerreStar  Corporation or its bankruptcy estate.  However, the full implications
of the TerreStar bankruptcy cases on EB's profit, financial position and outlook
can  be  finally  determined  only  when  the  outcome of the TerreStar Networks
Chapter  11 cases  is  known,  including  all  costs  related  to collecting the
receivables  and e.g. confirmed  tax treatment. The  Settlement Payment does not
affect  the outlook for the year 2012 published  in the Interim Report of August
7, 2012 as  the guidance on the profit outlook  was based on the assumption that
there  will be no further bookings of impairments of EB's accounts receivable or
non-recurring income from TerreStar Networks Inc. and TerreStar Corporation.

Earlier,  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.,  and TerreStar Corporation  and certain of
its  preferred shareholders, of  the various disputes  between them in TerreStar
Corporation Chapter 11 reorganization cases. The Settlement does not include the
TerreStar  Networks Inc.  Chapter 11 cases,  which remain  pending, and does not
include  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 28, 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, August 3,  and August 25, 2012
stock  exchange  releases  as  well  as  in  EB's  interim reports and financial
statement at www.elektrobit.com.

Oulu, August 29, 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#1636864]