Press Releases

New Flyer Announces Intention to Seek Shareholder Approval for the Issuance of Income Deposit Securities in Exchange for Remaining Class B and Class C Shares

Winnipeg, Manitoba, Canada − April 5, 2010 − (TSX:NFI.UN) (“New Flyer” or the “Company”), the leading manufacturer of heavy-duty transit buses in Canada and the United States, today announced its intention to seek shareholder approval for the issuance of Income Deposit Securities (“IDSs”) in exchange for the remaining Class B common shares and Class C common shares (collectively, the “Class B&C Shares”) of New Flyer’s subsidiary, New Flyer Holdings, Inc. (“NFL “Holdings”).

Since New Flyer’s initial public offering in 2005, certain members of the Company’s current and former management team (the “management optionholders”) have held fully vested options to acquire units of New Flyer LLC.  New Flyer LLC in turn owns the Class B&C Shares.  As a result, the management optionholders currently hold an indirect economic interest of approximately 5% in New Flyer’s business through the Class B&C Shares.  Under the terms of the Class B&C Shares, holders have the right (the “Liquidity Right”), in certain circumstances, to request NFL Holdings to use its best efforts to arrange financing to acquire or purchase for cancellation their Class B&C Shares.  Historically, the Company has completed public offerings of IDSs, the net proceeds of which have been used to finance the purchase of Class B&C Shares.

Rather than conducting a further public offering of IDSs, the Board of Directors has approved, in principle, a series of transactions that will result in the exchange or redemption of the Class B&C Shares held by New Flyer LLC, the cancellation of the options held by the management optionholders and the issuance of new IDSs to the management optionholders (the transactions are referred to as, the “Retained Interest Conversion”).   In this manner, the management optionholders’ existing ownership interest in New Flyer would be converted into a continuing ownership interest in the form of IDSs with a similar result as if the Liquidity Right was exercised for cash proceeds which were in turn used by the management optionholders to acquire newly issued IDSs at the prevailing market price.  Upon the completion of the Retained Interest Conversion, the management optionholders would receive, in the aggregate, approximately 2.1 million IDSs, representing approximately 4% of the outstanding IDSs.  Accordingly, the management optionholders’ aggregate percentage ownership interest in New Flyer’s business will remain substantially unchanged.  The precise number of IDSs to be issued will be determined in a manner consistent with the securityholders agreement of NFL Holdings and will vary based on the exchange rate between Canadian and US dollars at the time the transactions are completed.

The IDSs received by the management optionholders would be issued on a private placement basis and would not be freely tradeable for a period of four months pursuant to Canadian securities laws.  Some of the management optionholders (who are not directors or officers of New Flyer) may elect to receive cash instead of IDSs.  Such cash payments, together with certain withholding taxes payable by the management optionholders, would be funded by the acquisition of a portion of the newly issued IDSs by other management optionholders or directors or officers of New Flyer.  Such acquisitions would involve not more than approximately 7% of the aggregate number of IDSs to be received by the management optionholders and would be completed at the prevailing IDS market price.

Completing the Retained Interest Conversion rather than another public offering of IDSs would provide significant transaction cost savings for New Flyer. From the perspective of ongoing cash distributions, management expects that the issuance of new IDSs in exchange for the Class B&C Shares will be either cash flow neutral or slightly accretive for New Flyer.  This expectation is based on the current level of distributions paid on the Class B&C Shares and the IDSs and the number of IDSs expected to be issued in connection with the Retained Interest Conversion.

The Retained Interest Conversion is subject to approval by the Company’s shareholders at the upcoming shareholders meeting to be held on May 13, 2010 and certain other closing conditions.  Further details regarding the Retained Interest Conversion will be provided in New Flyer’s management information circular expected to be mailed to shareholders in the middle of April.

Forward-Looking Statements
This press release may contain forward-looking statements relating to expected future events and financial and operating results of New Flyer that involve risks and uncertainties.  Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including market and general economic conditions, the covenants contained in the senior credit facility and subordinated note indenture of New Flyer Industries Canada ULC (“NFI ULC”) and the other risks and uncertainties detailed in the disclosure documents filed with the Canadian securities regulatory authorities.  Due to the potential impact of these factors, the Company and NFI ULC disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless required by applicable law.

For further information, please contact:
New Flyer Industries Inc.
Glenn Asham, Chief Financial Officer
Tel: 204-224-1251