Student Transportation of America Ltd. Closes $45 Million Offering of
Debentures

    
    /NOT FOR DISTRIBUTION IN THE UNITED STATES OR OVER UNITED STATES WIRE
    SERVICES/
    

BARRIE, ON, Oct. 26 /CNW/ - Student Transportation of America Ltd. ("STA" or the "Company") (TSX:STB) announced today that it has closed its offering of 7.5% convertible subordinated unsecured debentures due October 31, 2014 at a price of $1,000 per debenture for total gross proceeds of $45 million . The offering was underwritten by a syndicate of underwriters led by BMO Nesbitt Burns Inc. and includes CIBC World Markets Inc., Scotia Capital Inc., Cormark Securities Inc., Wellington West Capital Markets Inc., National Bank Financial Inc. and Raymond James Ltd.

The net proceeds from the offering will be used to fund redemption of 14% subordinated notes and for general corporate purposes.

"This transaction allows us to have certainty today that we will be able to execute the call option on the 14% notes in December effectively replacing them with new convertible debt at almost half the coupon," said Denis J. Gallagher, CEO. "This will save us almost C$2 million in interest payments on an annualized basis, lower our cost of capital and ensures our commitment to our growth program and attractive dividend policy."

The securities offered have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act"), and may not be offered or sold within the United States or to, or for the account or benefit of, U.S. persons except, and in compliance with applicable U.S. state securities laws, in certain transactions exempt from the registration requirements of the U.S. Securities Act.

About Student Transportation of America Ltd.

Founded in 1997, Student Transportation of America (STA) is North America's third-largest and fastest-growing provider of school bus transportation services, operating more than 6,300 vehicles. STA's family of local companies delivers safe, reliable, and cost-effective transportation solutions to school districts throughout the U.S. and Canada . Services are delivered by drivers, dispatchers, maintenance technicians, terminal managers and others who are caring members of their local communities. For more information, please visit www.rideSTA.com.

Forward-Looking Statements

This news release contains "forward-looking statements" within the meaning of applicable securities laws, which reflects the expectations of management regarding Student Transportation of America Ltd.'s, Student Transportation of America ULC's and Student Transportation of America Holdings, Inc.'s (the "Company") results of operations, expense levels, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the Company's growth strategy and cash distributions and regarding the completion of the offering of the Debentures. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "expect", "intend", "track", "targeted", "estimate", "anticipate", "believe", "should", "could", "plans" or "continue" or similar expressions suggesting future outcomes or events. These forward looking statements reflect the Company's current expectations regarding anticipated future events, results, circumstances, performance, or expectations that are not historical facts. Forward looking statements involve significant risks and uncertainties, and 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 which or by the performance or results will be achieved. A number of factors could cause our actual results to differ materially from the results discussed, expressed or implied in any forward-looking statement made by us or on our behalf, including, but not limited to, the factors discussed under "Risk Factors" in our Annual Information Form and the fact that the offering of the Debentures described in this press release is subject to certain conditions, which, if not satisfied or waived, could result in the offering not being completed. These forward looking statements are made as of the date of this news release and, except as required by applicable law, we undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

For further information: Student Transportation of America Ltd., Denis J. Gallagher, Chairman and Chief Executive Officer, Phone: [phone], Fax: [phone]; Patrick J. Walker, Executive Vice President and Chief Financial Officer, Phone: [phone], Fax: [phone]; Keith P. Engelbert, Director of Investor Relations, Phone: [phone], Fax: [phone], Email: [email protected], Website: www.rideSTA.com