New Flyer announces notice to redeem 14.0% subordinated notes and entry into amendment to senior credit facility

WINNIPEG, June 25, 2012 /CNW/ - (TSX:NFI, TSX:NFI.UN, TSX:NFI.DB.U) New Flyer Industries Inc. ("NFI") and New Flyer Industries Canada ULC ("NFI ULC", together with NFI, "New Flyer" or the "Company") announced today that NFI ULC has formally commenced the process to redeem all of its 14.0% subordinated notes (the "Subordinated Notes"), including the approximate C$59 million aggregate principal amount of Subordinated Notes, held by third parties in accordance with the terms of the trust indenture governing the Subordinated Notes (the "Indenture"). The Subordinated Notes will be redeemed on August 20, 2012 at a total price of C$58.4812 per C$55.30 principal amount of Subordinated Notes, representing a redemption price of C$58.065 per C$55.30 principal amount of Subordinated Notes (or 105% of principal), plus all accrued and unpaid interest to and including the redemption date.  Notice of the redemption of the Subordinated Notes will be delivered to CDS Clearing and Depository Services Inc. ("CDS") in accordance with the terms of the Indenture.

Subordinated Notes are held separately and in the form of an income deposit security ("IDS"). Each IDS consists of one common share of NFI and C$55.30 principal amount of Subordinated Notes. On the redemption date, the IDSs will be automatically separated and holders of IDSs will receive (i) that number of common shares of NFI equal to the number of IDSs held immediately prior to redemption of the Subordinated Notes, and (ii) C$58.4812 per C$55.30 principal amount of Subordinated Notes, representing the redemption price, plus all accrued and unpaid interest to and including the redemption date.

The redemption of the 14% Subordinated Notes will be financed with the net proceeds of NFI's recently completed public offering of 6.25% convertible unsecured subordinated debentures.

As previously announced, once the redemption of the Subordinated Notes is completed, the board of directors of NFI expects to establish a new dividend policy that will reduce the annualized dividend payment to approximately 50% of the previous annual IDS distribution level of C$1.17 per IDS.

Upon completion of the redemption of the Subordinated Notes, NFI ULC will apply to cease to be a reporting issuer under the securities laws of each province and territory of Canada.  New Flyer will also apply to de-list the IDSs from the TSX and, following such de-listing, the common shares of NFI forming part of an IDS will commence trading separately and continue to be listed (together with the current separately-traded common shares of NFI) on the TSX under the trading symbol "NFI".

Non-registered holders (banks, brokerage firms or other financial institutions) who maintain their interests in IDSs or Subordinated Notes through CDS should contact their CDS customer services representative with any questions about the redemption. Beneficial holders of IDSs or Subordinated Notes, including retail investors, with any questions about the redemption should contact their brokerage firm or financial institution which holds interests in the IDSs or Subordinated Notes on their behalf.

The Company also confirms that it has entered into an amendment to its senior credit facility today which amends certain of the covenants effective on the redemption of the Subordinated Notes. As previously announced, the covenant changes are intended to reflect the Company's new capital structure following the redemption of the Subordinated Notes. A copy of the amendment will be filed on SEDAR in due course at www.sedar.com.

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 four parts distribution centers in Winnipeg, MB; Erlanger, KY; Fresno, CA and Brampton, ON.

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. New Flyer has delivered over 31,000 heavy-duty buses in Canada and the United States.  All products are supported with an industry-leading, comprehensive parts and service network.

Further information is available on New Flyer's web site at www.newflyer.com.

The common shares, IDSs and convertible debentures of NFI are traded on the Toronto Stock Exchange under the symbols NFI, NFI.UN and NFI.DB.U, respectively.

Forward-Looking Statements
This press release contains forward-looking statements relating to expected future events and financial and operating results of New Flyer that involve risks and uncertainties.  The words "believes", "anticipates", "plans", "expects", "intends", "projects", "estimates" and similar expressions are intended to identify forward looking statements.  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. Actual results may differ materially from management expectations as projected in such forward-looking statements for a variety of reasons, including the ability to complete the redemption of the Subordinated Notes, market and general economic conditions and economic conditions of and funding availability for customers to purchase buses and to exercise options for buses and to purchase parts or services, the covenants contained in NFI ULC's senior credit facility, as amended, the subordinated note indenture could impact the ability of New Flyer to continue to fund distributions and dividends and take certain other actions, and the other risks and uncertainties discussed in the materials filed with the Canadian securities regulatory authorities and available on SEDAR at www.sedar.com. Due to the potential impact of these factors, New Flyer disclaims 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.

Glenn Asham
Chief Financial Officer
Tel: [phone]
E-mail: [email protected]