Student Transportation of America Announces New Exchange Offer

TORONTO, Jul 8, 2008 (Canada NewsWire via COMTEX News Network) —
/NOT FOR RELEASE OVER U.S. NEWSWIRE SERVICES./

Each of Student Transportation of America Ltd. (“STA Ltd.”) and Student Transportation of America ULC (“STA ULC” and, together with STA Ltd., “STA”) announced today that its board of directors has approved an exchange offer (the “Exchange Offer”) pursuant to which STA will offer holders of subordinated notes of STA ULC who are resident in Canada, the United States and, where permitted by applicable laws, outside of North America (including holders of subordinated notes represented by income participating securities of STA (“IPSs”)) 0.76 of a common share of STA Ltd. in exchange for each $3.847 principal amount of subordinated notes of STA ULC (being the principal amount of notes represented by an IPS).

    <<
    The Exchange Offer is being made for the following reasons:

    -   STA believes the Exchange Offer will provide enhanced liquidity in
        the common shares through the increase of the public float of common
        shares;

    -   the Exchange Offer will facilitate the STA's transition from its
        current IPS structure to a traditional common share structure, which
        STA believes will: (i) provide greater flexibility to execute its
        business plan and to pursue growth opportunities as they arise,
        primarily as a result of an improved access to capital, and (ii)
        enhance the market's understanding of STA by facilitating relative
        comparisons to its publicly-traded industry peers;

    -   the Exchange Offer will provide liquidity to holders of notes that
        are not represented by IPSs;

    -   STA's previous exchange offer in 2007 was favourably received by a
        majority of noteholders who tendered an aggregate of approximately
        $45.8 million, or approximately 51%, of the outstanding principal
        amount of subordinated notes;

    -   the Exchange Offer will also be open to noteholders resident in the
        United States, who were unable to participate in STA's previous
        exchange offer in 2007;

    -   the Exchange Offer will allow STA to reduce its financial leverage,
        providing it with greater flexibility to continue to pursue future
        growth opportunities;

    -   STA believes that completion of the exchange offer will lower its
        cost of capital by replacing interest payments on the subordinated
        notes with dividends on the common shares;

    -   STA believes that holders will be more favourably taxed in respect of
        the receipt of dividends, as compared to interest income; and

    -   STA expects that the total payout ratio will decrease over time, as
        the current cash dividend on 0.76 of a common share is less than the
        14% coupon on $3.847 principal amount of notes.
    >>

STA will file an Exchange Offer circular with the securities regulatory authorities in each of the provinces and territories of Canada with respect to the Exchange Offer, which will expire at 5:00 p.m. (Eastern) on August 13, 2008, subject to STA’s right to extend the Exchange Offer. There are certain conditions that apply which, if not satisfied, would allow STA to terminate the Exchange Offer, unless such conditions are waived by STA at its option. Further information regarding such conditions is available in the Exchange Offer circular, which will be available on SEDAR at www.sedar.com.

THE SECURITIES OFFERED PURSUANT TO THE EXCHANGE OFFER HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION OR APPLICABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS. THIS
PRESS RELEASE SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL.

About Student Transportation

Founded in 1997, Student Transportation is the fourth-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 operates more than 5,400 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, and the negative forms thereof, suggesting future outcomes or events. These forward looking statements reflect STA’s current expectations regarding anticipated future events, results, circumstances, performance or expectations, including the completion of the Exchange Offer, 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 or by which the performance or results will be achieved. A number of factors could cause 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 acquisition of less than a significant number of notes under the Exchange Offer and the factors discussed under “Risk Factors” in the Exchange Offer circular and STA’s Annual Information Form, which are available on SEDAR at www.sedar.com. These forward looking statements are made as of the date of this news release and, except as required by applicable law, STA undertakes 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, (732) 280-4200, (732) 280-4213 (FAX); Patrick
J. Walker, Executive Vice President and Chief Financial Officer, (732) 280-4200,
(732) 280-4213 (FAX); Keith P. Engelbert, Director of Investor Relations, (732)
280-4200, (732) 280-4213 (FAX), Email: kengelbert@rideSTA.com, Website:
www.rideSTA.com

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