STOCK EXCHANGE RELEASE
Free for publication on November 20, 2010, at 12:30 a.m. (CET+1)
EB (ELEKTROBIT CORPORATION) HAS INITIATED LEGAL PROCEEDINGS AGAINST ITS CUSTOMER TERRESTAR CORPORATION SEEKING TO COLLECT RECEIVABLES IN THE AMOUNT OF APPROXIMATELY USD 25.8 MILLION
EB's (Elektrobit Corporation) subsidiary Elektrobit Inc. has filed a lawsuit against its customer TerreStar Corporation (TerreStar) in the Supreme Court of the State of New York seeking payment of its outstanding receivables in the amount of approximately USD 25.8 million from TerreStar.
The claim is based on a guarantee issued by TerreStar for EB's receivables from TerreStar's majority-owned subsidiary TerreStar Networks Inc. (TerreStar Networks) that has filed a voluntary petition for reorganization under Chapter 11 of the United States Bankruptcy Code, as informed by EB on October 20, 2010. Further, the claim is also based TerreStar's direct contractual obligations towards EB. At the moment, EB's receivables from TerreStar Networks amount to approximately USD 25.9 million (EUR 19.0 million as per exchange rate of November 18, 2010).
The lawsuit filed by EB is not expected to affect EB's rights in the reorganization proceedings initiated by TerreStar Networks. The court filings relating to such proceedings continue to contain limited information on how EB's receivables will be treated in the reorganization, but the plan of reorganization filed by TerreStar Networks and its affiliated debtors suggests that payment of EB's receivables may take the form of newly issued common stock and rights to purchase newly issued preferred stock in the reorganized debtors. The plan of reorganization is subject to court and creditor approval under United States bankruptcy law.
Currently, TerreStar is not part of the reorganization proceedings initiated by TerreStar Networks. According to court filings relating to the reorganization proceedings, it is contemplated by TerreStar Networks that TerreStar (and its subsidiary TerreStar Holdings Inc.) will file their own voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code in the near term. It is EB's understanding that if TerreStar did file for reorganization, the legal proceedings brought by EB against TerreStar would be stayed under the United States bankruptcy law.
Based on information currently available to EB, the above legal proceedings and TerreStar Networks' reorganization proceedings so far will not affect EB's earlier assessments on the effects of the reorganization proceedings and nor do they affect the outlook for EB's profit and financial position. EB has disclosed assessments on the effects of the proceedings and information on the effects and outlook for EB's profit and financial position on October 25, 2010 and in the January-September 2010 interim report of October 28, 2010. It is possible that, based on later information related to TerreStar Network's reorganization and/or any possible filings for reorganization by TerreStar, this view may need to be reconsidered.
Oulu, November 20, 2010
EB, Elektrobit Corporation
Jukka Harju
Chief Executive Officer
Further information:
Jukka Harju
Chief Executive Officer
Tel +358 40 344 5466
For further information on TerreStar and TerreStar Networks, please see www.terrestar.com (http://www.terrestar.com/) and www.TerreStarInfo.com.
Distribution:
NASDAQ OMX Helsinki
Principal media
EB, Elektrobit Corporation
EB develops advanced technology and transforms it into enriching end user experiences. EB specializes in demanding embedded software and hardware solutions for the automotive industry and wireless technologies. The company's net sales for the year 2009 totaled EUR 153.8 million. Elektrobit Corporation is listed on the NASDAQ OMX Helsinki. www.elektrobit.com (../../mstudent/Local%20Settings/Temporary%20Internet%20Files/Local%20Settings/Documents%20and%20Settings/Documents%20and%20Settings/bungkar/Local%20Settings/Documents%20and%20Settings/Documents%20and%20Settings/bungkar/Local%20Settings/Documents%20and%20Settings/Documents%20and%20Settings/Documents%20and%20Settings/Documents%20and%20Settings/AppData/Local/Microsoft/Local%20Settings/Temporary%20Internet%20Files/oikoluku/www.elektrobit.com)
HUG#1464305
This announcement is distributed by Thomson Reuters on behalf of Thomson Reuters clients.
The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and other applicable laws; and
(ii) they are solely responsible for the content, accuracy and originality of the
information contained therein.
Source: Elektrobit Oyj via Thomson Reuters ONE
