Student Transportation Announces New Fleet Leasing Program

BARRIE, ON, Jul 9, 2009 (Canada NewsWire via COMTEX News Network) —

Student Transportation of America, Ltd. (STA) (TSX: STB) announced today that it has finalized its new fleet leasing program for the company’s fiscal 2010 year which began last week on July 1. The completed leasing transaction with two major financial institutions totaling $11,000,000 for approximately 200 vehicles carries an effective fixed rate of 5.9% interest for six years.

"The lease transaction is a great way for us to continue to use our capital wisely," said STA Chairman and Chief Executive Officer Denis J. Gallagher. "We plan to use the current credit facilities for the tremendous growth opportunities we are experiencing. While many have thought the leasing market dried up, we received several leasing proposals this year from which to choose."

The company added leasing to its financial portfolio several years ago as an alternative means of financing allowing the credit agreement borrowing availability to be used for growth.

"When we combine the recent equity capital raise with a very low (less than 3%) senior debt borrowing rate, our cost of capital is very attractive to fund the new contracts secured to date in addition to those pending," added Gallagher. "The recently announced new contract awards and conversions of school district owned and operated fleets will result in increased cash flows this year that will more than cover the amount of dividends added in connection with the recent equity capital raise. We anticipate our cash available for distributions to be at record high levels this fiscal year. This not only secures our current dividend, which we believe is a very stable and attractive investment, but with significant availability under the credit agreement also allows us to take advantage of quality acquisition, bids and conversion opportunities in the marketplace."

The company said its recent decision to trade only the common shares allows current and future investors to participate in the company’s growth and eliminates the confusion related to the IPS structure.

"There are very few companies today that have new high margin business, low cost equipment financing, considerably lower fuel and interest cost versus last year, higher cash available for distributions and many quality growth opportunities," added Gallagher. "These are all signs of another good year for STA and its shareholders."

About Student Transportation

Founded in 1997, Student Transportation is the third-largest provider of school bus transportation services in North America, conducting operations through local operating subsidiaries. Student Transportation 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 6,300 school vehicles in North America. 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 STA’s results of operations, expense levels, cost of capital, financial leverage, seasonality, cash flows, performance, liquidity, borrowing availability, financial ratios, ability to execute the STA’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", "plans" or "continue" or similar expressions suggesting future outcomes or events. These forward looking statements reflect STA’s current expectations regarding anticipated future events, results, circumstances, performance or expectations, which 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.

SOURCE: Student Transportation of America Ltd.

SOURCE: Student Transportation of America ULC

INVESTOR CONTACTS: Student Transportation of America Ltd., Denis J. Gallagher,
Chairman and Chief Executive Officer; Patrick J. Walker, Executive Vice President and
Chief Financial Officer; Keith P. Engelbert, Director of Investor Relations, (732)
280-4200, Email: kengelbert@rideSTA.com, Website: www.rideSTA.com

 

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