GeoSentric Oyj - Company Announcement

FINANCING UPDATE, PRELIMINARY PROPOSAL FOR SHORT-TERM FINANCING RECEIVED, NEGOTIATIONS CONTINUE, PARTICIPATION FROM OTHER HOLDERS EXPECTED TO AVOID HIGH DILUTION AND LOSING CONTROL OVER GYPSII ASSETS

The Company announced on January 20, 2011 an agreement for further additional
financing of up to 1.8M€ of which 800,000€ were raised immediately and
remaining 1M€ at the end of January 2011. The Company further announced on
February 2, 2011 that it does not have any committed or secured financing for
its operations after the Q1 2011 and that it is working intensively with its
lead investor and other key investors and shareholders to secure a long-term
financing solution. The Company estimated that retaining sufficient liquidity
would require at minimum of 5.2M€ of additional financing received in 2011 in
addition to already received 1.8M€. The Company also said that it is planning
to offer all its shareholders an opportunity to participate the financing on
equal terms to those to be agreed with and offered to the investors. 



The Board and the management of the Company have engaged in continuous
discussions with the Company's major shareholders and investors to negotiate on
the terms on which they would be interested to participate in the financing.
Despite all efforts the negotiations have been unsuccessful so far, and no
major shareholder except for the lead investor has confirmed its interest to
participate. 



As a result, the Company has now received preliminary proposal from the lead
investor on which basis the lead investor has indicated their interest to
commit to further financing to secure Company's solvency in the short term and
offering runway through the Q2 2011. The different alternatives to implement
the financing are yet being explored with the lead investor and the final terms
are still subject to agreement. 



In its preliminary proposal the lead investor has presented the additional
short term financing to be implemented via GeoSolutions Holdings N.V. by
extending the current financing structure. GeoSolutions Holdings N.V. is
Company's wholly owned subsidiary that acts as a holding company for all GyPSii
business related assets. The lead investor has to the date invested in
GeoSolutions Holdings N.V. in total of 15.3M€ in a form of preferred
convertible notes (“Notes”). The amount of accrued interest on the Notes is
approximately 940t€. The terms and conditions of the Notes were approved by the
Extraordinary General Meeting held on November 17, 2009 and by the Annual
General Meeting held on June 30, 2010. According to the terms of the Notes the
lead investor may convert the Notes either in the shares of GeoSolutions
Holdings N.V. or in the shares of the Company. 



As a part of the process the Company is committed to prepare a proposal for a
long term financing solution, acceptable to the lead investor and involving
participation by the other shareholders to the agreed minimum level to satisfy
the long term financing needs of the Company and its subsidiaries. The offering
to the shareholders would be implemented during the Q2 2011. Should the other
shareholders decide not to participate in the financing to the required minimum
level, according to the proposed terms by the lead investor, the potential
consequence would be dilution of the current shareholdings to a marginal level
as a result of conversions of the Notes. Alternatively, if the lead investor
decided to convert their Notes into the shares of GeoSolutions Holdings N.V.,
as they have indicated in their preliminary proposal, they could claim majority
ownership of GeoSolutions Holdings N.V. shares, depending on public share price
of the Company and amount of additional financing and further subject to the
previously agreed financing terms and the respective resolutions by the
Company's Extraordinary General Meeting held in November 2009 and Annual
General Meeting held in June 2010. 



The Company aims at finalizing the proposed financing terms with the lead
investor by the end of March and will release an update to the markets as soon
as the final terms have been agreed to. 





GeoSentric Oyj





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



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NASDAQ OMX Helsinki

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