Stock Exchange & Press Releases 2015

August 24, 2015

Bittium Corporation is planning to repurchase its own shares and stock options for a total purchase price of approximately EUR 595 million in a voluntary public tender offer directed to all shareho...

Stock Exchange Release

Not for release, publication or distribution (in whole or in part) in, into or from the United States or any judisdiction where to do so would counstitute a violation of the relevant laws of such jurisdiction.

Bittium Corporation is planning to repurchase its own shares and stock options for a total purchase price of approximately EUR 595 million in a voluntary public tender offer directed to all shareholders and holders of stock options 2008C of the Company

The Board of Directors of Bittium Corporation has decided to convene an Extraordinary General Meeting on September 14, 2015 to decide on a repurchase of its own shares ("Shares") and stock options 2008C ("Stock Options") through a voluntary public tender offer directed to all shareholders and holders of Stock Options of the Company (the "Offer").

Summary:

• The Offer would be made at market price and the consideration offered would be determined as the volume weighted average price of the Share based on transactions in NASDAQ OMX Helsinki Ltd over the five days preceding the acceptance of the offer document rounded to the nearest full EUR cent (the "Offer Price");
• The Offer would be made for a maximum of 124,747,351 Shares, corresponding approximately to 94.1 per cent of all the Shares in the Company on the date of this release. The Offer would also be made for a maximum of 252,648 Stock Options. The Offer would be executed only for the part of the consideration payable for the Shares amounting up to EUR 593,797,392.67 in the aggregate and for the Stock Options amounting up to EUR 1,202,607.33 in the aggregate;
• The maximum number of Shares and Stock Options that the Offer concerns have been determined on the basis of the numbers of all Shares and Stock Options in the Company so that the Offer concerns the same proportional share of all the Shares and Stock Options taking into account the 277,005 new shares to be registered on or about September 1, 2015 subscribed for pursuant to the Stock Options, the subscriptions of which the Company has accepted on August 20, 2015 and the corresponding decrease in the number of Stock Options;
• A shareholder or a holder of Stock Options may accept the Offer for all the Shares and/or Stock Options owned by him/her or for a number of Shares and/or Stock Options of his/her choosing per each book-entry account. Possible multiple acceptances by the same person of Shares and Stock Options, respectively, will be combined for each book-entry account;
• The Shares and Stock Options to be repurchased by the Company based on the accepted offers will become null and void as a part of the settlement of the Offer's execution so that they will not become in the Company's possession. Thus, the restriction in the Finnish Limited Liability Companies Act concerning the purchase of own shares, according to which the purchase of own shares may not be executed in a way that the number of own shares held by a company would exceed one tenth (1/10) of all the shares in such a company, does not restrict the execution of the Offer;
• The completion of the Offer is conditional upon that no such fact or circumstance has occurred after the date of this release that would constitute a material adverse change in Bittium or in its subsidiaries, considered as a whole;
• The price offered for the Stock Options is the Offer Price subtracted with the share subscription price of the Stock Option, which was EUR 0.55 per share on August 20, 2015;
• The Company intends to publish an offer document, which includes more detailed information on the Offer, on or about September 23, 2015;
• The seven largest shareholders and a certain major shaholderof Bittium, representing in the aggregate approximately 47.4 per cent of all the Shares and votes in Bittium, have undertaken to vote for accepting the Offer in the Extraordinary General Meeting;
• In the Offer, the seven largest shareholders and a certain major shareholder of Bittium have, as described in detail in the following, undertaken to offer for repurchase at least 70 per cent of the Shares each of them owns, in the aggregate 43,949,571 Bittium shares, corresponding approximately to 33,2 per cent of all the shares and votes in Bittium.

Background and reasons for the repurchase

The Company announced the sale of its Automotive business to German Continental AG for a purchase price of EUR 600 million on May 19, 2015. The closing of the transaction was announced on July 1, 2015. Further, on August 8, 2015, the Company announced that it plans to distribute the net proceeds from the sale of its Automotive business to its shareholders in the first instance by repurchasing own shares in a voluntary public tender offer made to all shareholders of the Company.

The funds received from the sale of the Automotive business are not needed in the current business of the Company and distributing such funds to the shareholders is thus appropriate. As the amount of the funds to be distributed is exceptionally large in comparison with the size of the Company, the repurchase of own shares in a voluntary public tender offer is an appropriate way to execute the distribution. In the voluntary public tender offer of the Company to repurchase its own Shares, a large number of shareholders will have an opportunity to sell their Shares, which would not be possible in ordinary trading in the stock exchange due to a limited trading volume. The decrease in the number of Shares, due to the Offer and the Shares becoming null and void as part of the Offer, will further contribute to maintaining the share price of the Company on an appropriate level compared to a situation, where the profits to be used for the Offer would be distributed for the shareholders as dividends while the number of shares in the Company would remain unchanged.

The Company has received an advance ruling by the Finnish Central Tax Board regarding the tax treatment of a shareholder participating in the Offer, should Bittium repurchase its own Shares with the funds received in the sale of the Automotive business in a public tender offer under certain terms and conditions. Pursuant to the advance ruling by the Central Tax Board, the provisions in Section 29 of the Finnish Act on Taxation Procedure regarding veiled dividend are not applied to the repurchase of own shares and, thus, the taxation of a shareholder participating in the Offer would be conducted in accordance with the ordinary provisions on taxation of capital gains under Finnish tax law.

A shareholder or a holder of Stock Options residing outside of Finland is advised to contact a financial or legal advisor in their own country to determine the taxation and any possible securities market consequences for accepting the Offer.

The Offer Price

The Offer will be made at market price. The Offer Price will be the volume weighted average price of the Share based on transactions in NASDAQ OMX Helsinki Ltd. over the five days preceding the acceptance of the offer document, on or about September 22, 2015, rounded to the nearest full EUR cent. The Offer Price will be announced separately, in connection with the publication of the offer document.

The consideration offered for the holders of Stock Options is determined by subtracting the share subscription price of a Stock Option, which was EUR 0.55 per Share on August 20, 2015 from the Offer Price.

The Offer

The Board of Directors of the Company proposes to the Extraordinary General Meeting that the maximum total number of Shares to be repurchased could be 124,747,351 Shares, corresponding approximately to 94.1 per cent of all the Shares in the Company on the date of this release. The Company's Board of Directors proposes further that the proposed amount of profits to be distributed to the shareholders in the Offer would be a maximum of EUR 593,797,392.67 in total.

The Board of Directors of the Company proposes to the Extraordinary General Meeting that the maximum total number of Stock Options to be repurchased in the Offer would be 252,648 Stock Options. The Board of Directors proposes further that the maximum total amount of profits distributable to the holders of Stock Options in the Offer would be EUR 1,202,607.33.

The maximum numbers of Shares and Stock Options pursuant to the Offer have been determined on the basis of the numbers of all Shares and Stock Options in the Company so that the Offer concerns the same proportional share of all Shares and Stock Options taking into account the 277,005 new shares to be registered on or about September 1, 2015 subscribed for pursuant to the Stock Options, the subscriptions of which the Company has accepted on August 20, 2015 and the corresponding decrease in the number of Stock Options.

The estimate on the amount of distributable funds is based on the separate financial statements prepared for the period January 1, - July 1, 2015.

A shareholder or a holder of Stock Options may accept the Offer for all the Shares and/or Stock Options owned by him/her or for a number of shares and/or Stock Options of his/her choosing per each book-entry account.

According to the proposal of the Board of Directors, the Company would have a right to reduce the number of Shares to be repurchased in the Offer in proportion to the number of Shares offered for repurchase in the Offer separately for each book-entry account, if the total number of Shares validly accepted in the Offer would exceed the maximum number of the Shares to be repurchased, 124,747,351 Shares or the maximum amount of funds to be distributed EUR 593,797,392.67 (so called pro rata mechanism).

According to the proposal of the Board of Directors, the Company would correspondingly have a right to reduce the number of Stock Options to be repurchase in the Offer in proportion to the number of Stock Options offered for repurchase in the Offer separately for each book-entry account, if the total number of Stock Options validly accepted in the Offer would exceed the maximum number of the Stock Options to be repurchased, 252,648 Stock Options or the maximum amount of funds to be distributed EUR 1,202,607.33 (so called pro rata mechanism).

The completion of the Offer is conditional upon that no such fact or circumstance has occurred after the date of this release that would constitute a material adverse change in Bittium or in its subsidiaries considered as a whole. Such a material adverse change would especially be a change which would result in the amount of distributable funds required for the repurchase of the Shares and Stock Options pursuant to the Offer no longer being fully available for the Company. The Company may cease, before the final result of the Offer has been announced, to demand the fulfilment of the condition described above.

The offer period for the Offer is expected to begin on September 25, 2015 and expire on October 16, 2015. According to the proposal of the Board of Directors, the Company would reserve the right to extend the offer period, if needed, to a maximum of ten weeks counting from the commencement of the offer period.

The Shares and Stock Options to be repurchased by the Company based on the accepted offers will become null and void as a part of the settlement of the execution of the Offer, preliminarily on the settlement date, that the Shares or Stock Options will not become in the Company's possession. A shareholder or a holder of Stock Options who has accepted the Offer accepts in connection with accepting the Offer that the repurchased offered Shares and Stock Options will become null and void in connection with the execution of the Offer.

The detailed terms and conditions of the Offer and the instructions on how to accept the Offer will be included in the offer document, which the Company will publish on or about September 23, 2015.

On the announcement date of the Offer, the Company or its subsidiaries do not own the Company's own shares.

Pursuant to the Securities Markets Act, Helsinki Takeover Code of the Securities Market Association does not apply to a public tender offer for own shares.

Potential effects of the Offer on the ownership structure of the Company

Since the Offer concerns a maximum of 94.1 per cent of all the shares of the Company, the final result of the Offer may significantly affect the Company's ownership structure after the completion of the Offer. For example, it is possible that the relative ownership of a shareholder not selling all of his/her Shares in the Offer, will grow significantly after the completion of the Offer. Even if the ownership of such a shareholder would exceed 30 or 50 per cent of the votes attached to the Company's shares otherwise triggering the mandatory public tender offer obligation pursuant to Chapter 11 Section 19 of the Finnish Securities Markets Act, no obligation to launch a mandatory offer arises for such shareholder before the shareholder acquires or subscribes for more shares in the Company or otherwise increases his/her voting power in the Company. This is due to Chapter 11 Section 21 of the Securities Markets Act, which states that mere measures taken solely by the Company itself does not result in an obligation to launch a mandatory public tender offer. However, if the ownership of a shareholder would exceed 90 per cent of all the Shares and votes in the Company after the completion of the Offer, such shareholder would, pursuant to Chapter 18 of the Limited Liability Companies Act, have the right and obligation to redeem the Shares held by other shareholders regardless of the actions of such shareholder.

In the Offer, the Company's seven largest shareholders and a certain major shareholder of the Company have undertaken to offer for repurchase in the aggregate 43,949,571 Bittium shares, corresponding approximately to 33.2 per cent of all the shares and votes in Bittium. The number of Shares pursuant to the undertakings of each of the mentioned shareholder corresponds to at least 70 per cent of all the Shares owned by these shareholders on August 23, 2015. The shareholders have further undertaken not to acquire more shares in the Company before the commencement of the Offer and while the Offer is ongoing. These undertakings do not prevent the shareholders from selling their Shares for the part exceeding the number of Shares subject to the undertaking. All undertakings have been given with certain terms and conditions that cannot result in the expiration of the undertaking if the Offer is executed and assuming that the Extraordinary General Meeting decides to accept the Offer as proposed by the Board of Directors. Each of the five largest shareholders have also undertaken, provided that it is not  economically unreasonable, to reduce their ownership further in a situation where his ownership would exceed 30 per cent of all shares in the Company following the execution of the Offer. The purpose of the undertakings is to limit, among other things, the number of Shares that a current major shareholder could hold following the completion of the Offer, where the Offer is accepted for the most part or in its entirety.

Undertakings by certain shareholders

The seven largest shareholders and a certain major shareholder of Bittium, representing in the aggregate approximately 47.4 per cent of all the Shares and votes in Bittium, have undertaken to vote for accepting the Offer in the Extraordinary General Meeting.

In Oulu, August 24, 2015

Bittium Corporation

Board of Directors

Further Information:

Veli-Pekka Paloranta

CFO

Bittium Corporation

Tel. +358 40 344 5466

Distribution:

NASDAQ Helsinki

Main media

Bittium

Bittium is specialized in developing reliable and secure communications and connectivity solutions using the latest technologies and deep knowledge on radio technology. Bittium provides innovative products and customized solutions based on its product platforms, and R&D services for customers in various industries. Bittium also offers high quality information security solutions for mobile devices and portable computers. In 2014, net sales of continuing operations, was EUR 52.7 million and operating profit was EUR 0.8 million. Bittium is listed on Nasdaq Helsinki. www.bittium.com.

Disclaimer

This announcement is neither an offer to purchase nor a solicitation of an offer to sell shares in Bittium Corporation (the "Shares") anywhere in the world. The final terms and further provisions of the possible public tender offer (the "Offer") will be disclosed in the offer document once approved by the Finnish Financial Supervisory Authority. Holders of the Shares are strongly recommended to read the offer document and all announcements in connection with the Offer as they contain or will contain important information.

The Offer is not being made directly or indirectly, in or into the United States or any other jurisdiction where to do so would constitute a violation of the laws of such jurisdiction. The Offer is not being made by the use of the mails or any other means or instruments of interstate or foreign commerce (inter alia, transmission by fax, telephone or internet) in or into the United States, nor by the use of any facility of a national securities exchange in the United States. Accordingly, the sending or any other distribution of this announcement or any other accompanying document in or into the United States or any other jurisdiction, where to do so would constitute a violation of the laws of such jurisdiction, is prohibited.