TERRESTAR NETWORKS, A CUSTOMER OF EB (ELEKTROBIT CORPORATION), HAS FILED FOR REORGANIZATION TO STRENGTHEN FINANCIAL POSITION. EB HAS SIGNIFICANT RECEIVABLES FROM TERRESTAR NETWORKS.
(Thomson Reuters ONE) -
STOCK EXCHANGE RELEASE
Free for publication on October 20, 2010, at 9:30 (CEST +1)
TERRESTAR NETWORKS, A CUSTOMER OF EB (ELEKTROBIT CORPORATION), HAS FILED FOR
REORGANIZATION TO STRENGTHEN FINANCIAL POSITION. EB HAS SIGNIFICANT RECEIVABLES
FROM TERRESTAR NETWORKS.
A customer of EB's (Elektrobit Corporation) subsidiary Elektrobit Inc.,
TerreStar Corporation (TerreStar), has yesterday issued a press release
according to which its majority-owned subsidiary TerreStar Networks Inc.
(TerreStar Networks), which is also a customer of Elektrobit Inc., and certain
other affiliates of TerreStar have, in order to strengthen their financial
position, filed voluntary petitions for reorganization under Chapter 11 of the
United States Bankruptcy Code, which establishes a process for reorganizing
financially troubled companies. Under such reorganization process, payment by
TerreStar Networks of amounts owed to its creditors will require approval by the
United States Bankruptcy Court and, if made pursuant to a plan of
reorganization, an affirmative vote of TerreStar Networks' creditors. The timing
of any such payment cannot be predicted with any degree of certainty at this
time.
At the moment, EB's receivables from TerreStar Networks amount to approximately
USD 25.7 million (EUR 18.5 million as per exchange rate of October 19, 2010),
out of which USD 24.2 million (EUR 17.5 million as per exchange rate of October
19, 2010) are outstanding. TerreStar Networks' court filings contain only
limited information on how these receivables will be treated in the
reorganization. Thus, potential implications of TerreStar Networks' filing for
reorganization on EB's profit, financial position and outlook or the potential
implications on the parties' business relations cannot be currently evaluated.
Potential implications on EB will be announced later when reasoned analysis can
be made. Based on EB's current understanding, there is no reason to believe that
EB would not be able to collect at least most of the receivables in due course.
It is possible that based on later information, this view may need to be
reconsidered. At the worst, TerreStar Networks' reorganization process and
challenges in obtaining funding may also result in significant credit losses for
EB or even termination of the business relation should TerreStar Networks, in an
exercise of its business judgment and with Court approval, determine that it
will not comply with its contractual obligations towards EB as provided by EB.
According to TerreStar's release, TerreStar Networks has, concurrently with the
filing for reorganization, agreed on certain financing arrangements in order to
ensure the maintaining of business-as-usual operations during the restructuring
process and to support expedited emergence from the reorganization process.
Since 2007 EB Inc, a subsidiary of Elektrobit Corporation (EB), and TerreStar
have co-operated in development of handset technologies and reference designs
for TerreStar's satellite-terrestrial all-IP mobile network. The cooperation
has covered development of a dual-mode reference smartphone where EB acts as the
main integrator and delivers product creation services to TerreStar. The above-
mentioned receivables are mainly related to the R&D co-operation between the
parties. At the end of 2009 the co-operation expanded as the parties agreed that
EB will also have manufactured and deliver to TerreStar EB-designed
TerreStar(TM) GENUS(TM) smartphones. In September TerreStar(TM) GENUS(TM)
smartphone received the technical acceptance in the certification process of
mobile operator AT&T and is now available through AT&T on the USA market. EB has
sub-contracted with Electronics Manufacturing Services provider Flextronics to
manufacture the products to be delivered to TerreStar.
EB has, in its January-June 2010 Interim Report released on August 6, 2010,
announced that challenges in obtaining funding have also resulted in payment
delays by one of EB's customers and increased the risk of credit losses. The
customer referred to in the Interim Report is TerreStar Networks. EB will
release the January-September 2010 Interim Report on October 28, 2010.
Oulu, 20.10.2010
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 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
[HUG#1453352]
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Source: Elektrobit Oyj via Thomson Reuters ONE
Unternehmensinformation / Kurzprofil:
Datum: 20.10.2010 - 08:31 Uhr
Sprache: Deutsch
News-ID 45923
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contact information:
Town:
Oulu
Kategorie:
Business News
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"TERRESTAR NETWORKS, A CUSTOMER OF EB (ELEKTROBIT CORPORATION), HAS FILED FOR REORGANIZATION TO STRENGTHEN FINANCIAL POSITION. EB HAS SIGNIFICANT RECEIVABLES FROM TERRESTAR NETWORKS."
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