Marcopolo S.A. to make a C$116 million Strategic Investment in New Flyer
WINNIPEG, MB, Jan. 23, 2013 /CNW/ - (TSX:NFI, TSX:NFI.DB.U) New Flyer
Industries Inc. ("New Flyer" or the "Company"), the leading manufacturer of
heavy-duty transit buses in Canada and the United States, announced today that
Marcopolo S.A. has agreed to make a strategic investment of C$116 million to
acquire 11,087,834 newly issued common shares, representing a 19.99% stake
in New Flyer. Each common share will be issued at a price of C$10.50 per
share, or a 20% premium to the 30 day volume-weighted average trading price of
New Flyer's common shares on the TSX for the period ending January 23, 2013.
4,925,530 common shares will be issued to Marcopolo upon closing expected on
or prior to March 1, 2013 for aggregate consideration of C$51.7 million with
the remainder of the shares to be issued to Marcopolo at the same price per
share in one tranche over the next 12 months following closing as determined
by New Flyer based on its investment and financing needs and in certain other
circumstances. The investment is subject to customary TSX approval.
Founded in 1949, and headquartered in Caxias do Sul, Brazil, Marcopolo is one
of the world's largest bus builders and is primarily engaged in the
manufacturing of buses, bus bodies, and components with a product line
covering a wide range of models including: coach, urban, micro-buses, and
mini-buses. Marcopolo is listed on the Brazilian stock exchange (BM&F Bovespa:
With anticipated annual net revenues of approximately US$1.9 billion in 2012,
Marcopolo has a market capitalization of approximately US$2.8 billion and
employs over 22,000 people around the world. Marcopolo manufactures over
32,000 buses annually - 60% are for the Brazilian market and 40% for
international markets. Bus manufacturing is carried out directly by
Marcopolo and through various joint ventures with companies like Daimler, Tata
Motors, and others in seventeen plants located in Brazil, South Africa,
Argentina, Australia, Colombia, Egypt, India and Mexico. Marcopolo also has a
factory for bus parts and component fabrication in China. Further information
is available on Marcopolo's web site at www.marcopolo.com.br.
Marcopolo's most recent investments include: a 75% stake in Volgren,
Australia's largest bus body manufacturer, and a 51% share of Metalsur
Carrocerias S.R.L, an Argentine company which specializes in manufacturing
intercity bus bodies through a Marcopolo controlled company called Metalpar.
Marcopolo also owns minority stakes in the following Brazilian parts
suppliers: Spheros (heating/ventilation/air conditioning), WSUL (seating
foam), and MVC (plastics).
Marcopolo's strategic plan has included a stated intent to enter the Canadian
and US market and as such it identified New Flyer as an attractive investment
given the Company's leading position in the public transit market, operational
excellence, commitment to LEAN practises, and capacity to innovate and grow.
New Flyer plans to use the net proceeds of the Marcopolo investment to
continue to support its future growth and diversification initiatives in
accordance with the Company's strategic plan and for general corporate
purposes. In May 2012 of a Joint Venture with the UK's largest bus builder,
Alexander Dennis Limited, to introduce a MiDi bus in Canada and the US to both
public and private operators. In August 2012 New Flyer completed its
conversion from an Income Deposit Security structure to a common share
The two companies also signed a Memorandum of Understanding to explore
opportunities to cooperate on engineering, technical, purchasing and
operational matters, with a focus on reducing New Flyer's bus manufacturing
and aftermarket part costs and enhancing New Flyer's competitiveness. The
companies further agreed to assess Marcopolo's technology and products for
possible introduction into the Canadian and US markets through New Flyer as
well as New Flyer's technology and products for potential distribution into
The investment agreement permits Marcopolo to nominate a member to the Board
of Directors of New Flyer (the "Board") while Marcopolo holds at least 10% of
the outstanding common shares of New Flyer and grants Marcopolo pre-emptive
rights to purchase additional securities in certain circumstances to maintain
its proportionate interest in New Flyer. Marcopolo has agreed to certain
disposition and standstill restrictions including a requirement to hold the
shares it acquires for a period of at least two years and a restriction on
acquisitions of additional New Flyer securities and certain other actions for
a period of at least two years. The agreement also provides that if New Flyer
in the future enters into an agreement with a third party providing for the
acquisition of all of New Flyer's shares or assets, then Marcopolo will,
subject to certain exceptions, agree to vote in favor of and to sell its
shares as part of the transaction unless Marcopolo has made an alternative
proposal that the Board believes is superior or that the shareholders have
determined to accept.
The Honourable Brian Tobin P.C., O.C., Chair of the New Flyer Board of
Directors, said "We are thrilled to have such a respected global leader in the
industry invested in our company and actively supporting New Flyer's strategic
plan. We were approached by Marcopolo nearly one year ago and both companies
have invested considerable time and resources to get to know one another,
thereby ensuring that this investment makes sound strategic, economic and
cultural sense for each of us".
Paul Soubry, President and CEO of New Flyer added: "Marcopolo is a world-class
company with extensive technology, expertise and experience and we look
forward to working with them to take New Flyer to the next level. We were
impressed with Marcopolo on so many levels: from product range, to technology
and capability, to their commitment to all stakeholders (employees, customers,
shareholders, suppliers and their communities in which they operate). This
investment will allow us to be more aggressive in executing our growth,
diversification and new product development agenda while giving us timing
flexibility in drawing the second portion of the funds to ensure that the
additional dividend requirements can be better matched to cash flows generated
from the use of those funds".
José Rubens de la Rosa, CEO of Marcopolo, said "The investment is in line
with Marcopolo's growth strategy and marks its definitive entry into the U.S.
and Canadian markets, two of the most sophisticated and advanced in the world.
New Flyer has experience in manufacturing products with high standards in
terms of specifications and sophistication and in the development and
application of sustainable technologies, such as hybrid vehicles powered by
renewable and alternative fuels."
BMO Capital Markets acted as financial advisor to New Flyer on the transaction
and Blair Franklin acted as financial advisor to Marcopolo.
A conference call for analysts and interested listeners will be held on
Thursday January 24, 2013 at 1:00 p.m. (ET). The call-in number for
listeners is 888-231-8191 or 647-427-7450. A live audio feed of the call will
also be available at http://www.newswire.ca/en/webcast/detail/1103267/1202307.
Management will discuss the Marcopolo Strategic Investment Transaction
presentation which will be available on New Flyer's web site at
http://www.newflyer.com/index/events_and_presentations. A replay of the call
will be available from 4:00 p.m. (ET) on January 24th until 11:59 p.m. (ET) on
January 31st. To access the replay, call toll free 1-855-859-2056 or
416-849-0833 and then enter pass code number 92676348. The replay will also be
available on New Flyer's web site at
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;
Brampton, ON; Erlanger, KY and Fresno, CA. The Company also operates a New
Product Development center in Winnipeg, MB and a service center in Arnprior,
ON. With a skilled workforce of over 2,200 employees, New Flyer is a
technology leader, offering the broadest product line in the industry,
including drive systems powered by clean diesel, natural gas, electric trolley
as well as energy-efficient diesel-electric hybrid and now all-electric
battery vehicles. New Flyer has delivered over 32,000 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
and convertible unsecured subordinated debentures of New Flyer are traded on
the Toronto Stock Exchange under the symbols NFI and NFI.DB.U, respectively.
This press release may contain forward-looking statements relating to expected
future events, including the timing, and completion, of the investment
described herein and commercial cooperation between New Flyer and Marcopolo.
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
satisfaction of conditions to closing contained in the investment agreement,
risks related to acquisitions, joint ventures and other strategic
relationships with third parties, market and general economic conditions and
economic conditions of and funding availability for customers to purchase
buses and to purchase parts or services, customers may not exercise options to
purchase additional buses, the ability of customers to terminate contracts for
convenience 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, the
Company 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 (204) 224-125
SOURCE: New Flyer Industries Inc.
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