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4-Traders Homepage  >  Equities  >  Xetra  >  ELEKTROBIT    JOT   FI0009007264

ELEKTROBIT (JOT)
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ELEKTROBIT : EB (ELEKTROBIT CORPORATION) WILL BOOK A STATUTORY PROVISION OF 8.3 MILLION EUROS DUE TO RISK OF LOSING RECEIVABLES FROM ITS CUSTOMER TERRESTAR NETWORKS, PROVIDE ADVANCE INFORMATION ON JANUARY-SEPTEMBE

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10/25/2010 | 06:20pm CEST

STOCK EXCHANGE RELEASE

Free for publication on October 25, 2010, at 7:15 pm (CEST +1)

 

EB (ELEKTROBIT CORPORATION) WILL BOOK A STATUTORY PROVISION OF 8.3 MILLION EUROS DUE TO RISK OF LOSING RECEIVABLES FROM ITS CUSTOMER TERRESTAR NETWORKS, PROVIDE ADVANCE INFORMATION ON JANUARY-SEPTEMBER RESULT AND LOWER ITS SECOND HALF PROFIT ESTIMATE

 

EB (Elektrobit Corporation) has resolved to book a statutory provision in the amount of EUR 8.3 million related to receivables owed to its subsidiary Elektrobit Inc. by its customer TerreStar Networks Inc. (TerreStar Networks) that has filed for reorganization. EB informed on October 20, 2010 that TerreStar Networks has filed voluntary petitions for reorganization under Chapter 11 of the U.S. Bankruptcy Code.

 

According to advance information, EB's net sales during January-September 2010 increased by 5.5 per cent to EUR 119.9 million (EUR 113.7 million in January-September 2009). Operating loss was EUR -9.7 million (EUR -1.9 million in January-September 2009). Net sales during July-September 2010 amounted to EUR 33.7 million (EUR 33.5 million, 3Q 2009), representing an increase of 0.6% year-on-year. Operating loss during July-September 2010 was EUR -11.5 million (EUR -0.8 million, 3Q 2009). The booked statutory provision in the amount of EUR 8.3 million is included in the abovementioned operating loss figures.

 

TerreStar Networks' court filings with the United States Bankruptcy Court contain only limited information on how EB's receivables will be treated in the reorganization. Further, TerreStar Networks' court filings do not contain a plan of reorganization, which EB anticipates will be presented for the approval of creditors and the Court later in the bankruptcy case. After subsequent discussions on the matter, EB has resolved to make the statutory provision due to uncertainty as to how the receivables will be treated in the reorganization. Also, due to its customer's reorganization process, EB has lowered its Terrestar Networks related net sales estimates for the last quarter of 2010. More exact implications for the parties' future business relations cannot be currently evaluated.

 

Considering the current estimated implications of TerreStar Networks' filing for reorganization on EB's profit and financial position in the third quarter of 2010, as well as on the outlook for the parties' business relations during the last quarter, EB expects that net sales for the second half of 2010 will be higher than in the second half of 2009 (EUR 73.6 million) and operating profit for the second half of 2010, without the statutory provision of EUR 8.3 million, will be clear lower than the operating profit for the second half of 2009 (0.0 million). The weakening operating profit level is mainly due to lowered Terrestar Networks related net sales estimates. It is possible that, based on later information related to TerreStar Networks' reorganization, this outlook may need to be reconsidered.

 

Earlier EB had expected that the net sales for the second half of 2010 would be higher than in the second half of 2009 (EUR 73.6 million) and that the operating profit for the second half of 2010 would be at the level of or better than the operating profit for the second half of 2009 (EUR 0.0 million). Due to the holiday period and the nature of R&D services business the third quarter of 2010 was estimated to be weaker than the fourth quarter of 2010.

 

Based on EB's current understanding, there is no reason to believe that EB would not be able to collect in due course at least that portion of TerreStar Networks' receivables that exceed the amount of the above-mentioned statutory provision. It is possible that, based on later information, this view may need to be reconsidered.  At worst, TerreStar Networks' reorganization process and challenges in obtaining funding may 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. 

 

Despite the above mentioned statutory provision EB aims to collect the amounts owed to it by TerreStar Networks in full. At the moment, EB's receivables from TerreStar Networks amount to approximately USD 25.9 million (EUR 18.6 million as per exchange rate of October 22, 2010), out of which USD 24.2 million (EUR 17.4 million as per exchange rate of October 22, 2010) are outstanding.

 

As informed by EB on October 20, 2010 TerreStar Networks and certain other affiliates of TerreStar Corporation have based on information published on October 19, 2010, in order to strengthen their financial position, filed voluntary petitions for reorganization under Chapter 11 of the United States Bankruptcy Code. TerreStar Networks is a majority-owned indirect subsidiary of TerreStar Corporation. 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. It is also possible that the payment of receivables will be done partly or wholly in a form of shares in the reorganized company or in the form of other securities entitling creditors to obtain shares.  The form or timing of any such payment of EB's receivables cannot be predicted with any degree of certainty at this time.

 

EB will release the January-September 2010 Interim Report on October 28, 2010.

 

 

Oulu, 25.10.2010
EB, Elektrobit Corporation
Board of Directors

 

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:
https://inpublic.huginonline.com/Local%20Settings/Temporary%20Internet%20Files/OLK317/Documents%20and%20Settings/pok/Local%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#1455012


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


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