Toronto, Ontario – December 14, 2006 – Student Transportation of America Ltd. (“STA”) (TSX: STB.UN) announced today it has entered into a new amended and restated senior credit facility, and has concurrently completed a new issue of Senior Secured Notes by way of private placement. The completion of these two financings recognizes the improved financial performance of the Company through a reduction in overall interest rates, increased leverage availability and lengthening the term of maturity to five years.

The new facility established with STA senior lenders was led by BMO Capital Markets who also acted as Administrative Agent for the bank group which included GE Capital and CIBC World Markets Inc. The new US$75 million credit facility may be increased by up to $50 million and will be used for continued growth of the business and for working capital.

Simultaneously, the Company has completed a debt private placement with two Canadian insurance companies, Sun Life Assurance Company of Canada and Canada Life, to provide US$35 million of five year, fixed rate senior secured notes carrying a coupon of 5.941 per cent. CIBC World Markets Inc. acted as the sole Agent on the transaction.
“The amended and restated agreement is a natural evolution of our growth and recognizes our steady performance and the confidence of our senior lenders,” said Patrick Walker, Chief Financial Officer. “We are pleased to have new lower rates and increased capacity in our capital structure as well as new relationships with our Noteholders.”

“The actions we took in fiscal 2006, including the completion of two equity offerings, our new leasing program with GE Capital and our accretive growth initiatives have now given us the ability to use leverage to increase shareholder value as we use this facility for future revenue and cash flow growth which will lower our projected fiscal 2007 payout ratio.” added Mr. Walker.
Profile

The Issuer is the fifth-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. The Issuer has become a leading school bus transportation company by aggregating operations through the consolidation of existing providers and conversion of in-house operations and currently operates more than 4,000 school vehicles in North America. For more information, please visit www.sta-ips.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 the Issuer’s and Company’s 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. 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. 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 more information contact:

Denis J. Gallagher
Chairman and Chief Executive Officer
Fax: (732) 280-4213

Patrick J. Walker
Chief Financial Officer
Phone (732) 280-4200
Fax: (732) 280-4213

Keith P. Engelbert
Director of Investor Relations
Phone: (732) 280-4200
Fax: (732) 280-4213
[email protected]