Press Releases

New Flyer Announces Successful Completion of Non-Cash Rights Offering with Approximately 89% of Rights Exercised; Declares August Distribution; and Advises of Intent to Consolidate Shares

Winnipeg, Manitoba, Canada – August 19, 2011 − (TSX:NFI, TSX:NFI.UN) New Flyer Industries Inc. (“NFI”) and New Flyer Industries Canada ULC (“NFI ULC”) (together, “New Flyer”) announced the successful completion today of NFI’s previously announced non-cash rights offering (the “Offering”).  Shareholders of NFI have exercised approximately 89% of the rights issued pursuant to the Offering.

The completed transaction represents an important milestone for New Flyer in its pursuit of growth and diversification.  The conversion from the previous income deposit securities (“IDS”) structure to a traditional common share structure provides New Flyer with greater financial flexibility to pursue strategic opportunities and results in the reduction of approximately 76.5% or C$242.3 million principal amount of NFI ULC’s subordinated notes held by the public (both forming part of the IDSs and issued separately from the IDSs).  With the completion of the Offering, 443,790,704 common shares of NFI (“Shares”) are now issued and outstanding (which includes 5,487,554 Shares forming part of the IDSs that still remain outstanding as a result of holders not exercising the rights issued pursuant to the Offering).

Paul Soubry, President and Chief Executive Officer, commented, “We are very pleased with the strong shareholder support for our non-cash rights offering. We remain committed to being the market leader in the heavy duty transit bus and aftermarket sectors, and are well-positioned to strengthen and grow our company under our common share structure.”

New Flyer anticipates that commencing today, the additional Shares issued upon the exercise of the rights, together with previously issued Shares that were separated from an IDS (either independently or as a result of the exercise of a right), will be posted for trading on the Toronto Stock Exchange under the symbol “NFI”.

BMO Capital Markets acted as financial advisor to New Flyer in respect of the Offering and the conversion and as dealer manager to solicit the exercise of rights.

Declaration of August 2011 Cash Distribution

NFI declared today a dividend on the Shares held separately from IDSs in the amount of C$0.007167 per Share, which will be payable on September 15, 2011, to holders of record at the close of business on August 31, 2011.  The total cash dividends that would be received by a holder who previously held an IDS before the exercise of one right from the Offering is C$0.07167, representing the sum of cash dividends on the 10 Shares now held following the exercise of one right.

Also, New Flyer today declared a monthly cash distribution on the IDSs that still remain outstanding as a result of holders not exercising the rights issued pursuant to the Offering.  This cash distribution is in the amount of C$0.07167 per IDS, which will be payable on September 15, 2011, to holders of record of IDSs at the close of business on August 31, 2011.  The total distribution of C$0.07167 per IDS reflects a cash dividend of C$0.007167 per Share and an interest payment of C$0.06452 per C$5.53 principal amount of subordinated notes for the period from August 1, 2011 to August 31, 2011.

The IDSs trade on the Toronto Stock Exchange under the symbol NFI.UN.  As previously announced, if the IDSs do not meet the TSX listing requirements, or if management determines that the market for IDSs is not sufficiently liquid or that the additional costs and complexity of maintaining the listing of the IDSs outweigh the potential benefits of the listing, the IDSs will be delisted from the TSX.

The dividends on the Shares (including those Shares forming part of the remaining IDSs) are designated as “eligible dividends” for purposes of the enhanced dividend tax credit rules contained in the Income Tax Act (Canada) and any corresponding provincial and territorial tax legislation.

Consolidation of Shares

NFI intends to propose a 10:1 consolidation of Shares at a special meeting of shareholders to be held on September 30, 2011.  The record date for the determination of shareholders entitled to receive notice of and vote at the meeting will be August 25, 2011.  If the shareholders pass the resolution to consolidate the Shares as proposed, management anticipates to effect the consolidation shortly after the meeting.  Upon the consolidation being effective, management estimates that there will be approximately 44,379,070 Shares outstanding (including those forming part of the remaining IDSs).  The management information circular regarding the special meeting of shareholders and describing the proposed consolidation of Shares will be sent to shareholders and filed by NFI with the Canadian securities regulatory authorities in advance of the meeting.

About New Flyer

New Flyer is the leading manufacturer of heavy-duty transit buses in Canada and the United States. The Company’s three manufacturing facilities – in Winnipeg, MB; St. Cloud, MN; and Crookston, MN – are all ISO 9001, ISO 14001 and OHSAS 18001 certified.  The Company currently operates a parts fabrication facility in Elkhart, IN and three parts distribution centers in Winnipeg, MB; Erlanger, KY; and Fresno, CA. A fourth PDC is expected to open in Ontario in 2011.

With a skilled workforce of over 2,000 employees, New Flyer is a technology leader, offering the broadest product line in the industry, including drive systems powered by clean diesel, LNG, CNG and electric trolley as well as energy-efficient diesel-electric hybrid vehicles.  All products are supported with an industry-leading, comprehensive parts and service network. The Company’s income deposit securities are traded on the TSX under the symbol NFI.UN.  Further information is available on New Flyer’s web site at www.www.newflyer.com.

Forward-Looking Statements

Certain statements in this press release are “forward looking statements”, which reflect the expectations of management regarding New Flyer’s future growth, results of operations, performance and business prospects and opportunities.  The words “believes”, “anticipates”, “plans”, “expects”, “intends”, “projects”, “estimates” and similar expressions are intended to identify forward looking statements. These forward looking statements reflect management’s current expectations regarding future events and operating performance and speak only as of the date of this press release.  Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance or results, and will not necessarily be accurate indications of whether or not or the times at or by which such performance or results will be achieved.  A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements.  Such differences may be caused by factors which include, but are not limited to, the ability to complete the conversion to a common share structure, competition in the heavy-duty transit bus industry, availability of funding to New Flyer’s customers to purchase buses, parts or services at current levels or at all, competition and aggressive and reduced pricing in the industry, material losses and costs may be incurred as a result of product warranty issues, material losses and costs may be incurred as a result of product liability claims, changes in Canadian or United States tax legislation, reliance on a limited number of key executives who New Flyer may not be able to adequately replace in the event that they leave New Flyer, the absence of fixed term customer contracts and the termination of contracts by customers for convenience, the current “Buy-America” legislation and the Ontario government’s Canadian content purchasing policy may change and/or become more onerous, production delays may result in liquidated damages under New Flyer’s contracts with its customers, New Flyer’s ability to execute its planned production targets as required for current business and operational needs, New Flyer’s ability to generate cash from the planned reduction in excess work in process, currency fluctuations could adversely affect New Flyer’s financial results or competitive position in the industry, New Flyer may not be able to maintain performance bonds or letters of credit required by its existing contracts or obtain performance bonds and letters of credit required for new contracts, third party debt service obligations may have important consequences to New Flyer, the covenants contained in NFI ULC’s senior credit facility and subordinated note indenture could impact the ability of New Flyer to continue to fund distributions and take certain other actions, interest rates could change substantially and materially impact New Flyer’s profitability, the dependence on limited sources of supply, the timely supply of materials from suppliers, the possibility of fluctuations in the market prices of the pension plan investments and discount rates used in the actuarial calculations will impact pension expense and funding requirements, New Flyer’s profitability and performance can be adversely affected by increases in raw material and component costs, the availability of labour could have an impact on production levels, the ability of New Flyer to successfully execute strategic plans and maintain profitability and risks related to acquisitions. New Flyer cautions that this list of factors is not exhaustive.  These factors and other risks and uncertainties are discussed in New Flyer’s press releases and materials filed with the Canadian securities regulatory authorities and are available on SEDAR at www.sedar.com.

Although the forward looking statements contained in this press release are based upon what management believes to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward looking statements, and the differences may be material.  These forward looking statements are made as of the date of this press release and New Flyer assumes no obligation to update or revise them to reflect new events or circumstances, except as required by applicable securities laws.

For further information, please contact:

New Flyer Industries Inc.
Glenn Asham, Chief Financial Officer
Tel: 1-866-574-4940