New Flyer announces acquisition of aftermarket parts business from Daimler
Buses North America for approximately $29 million
-- Strengthens leadership position of Company as the largest
provider of aftermarket parts for the Canadian and US transit
-- Added value through combined scale, footprint and overhead
utilization and management expects transaction to be accretive
to earnings and cash flow
WINNIPEG, March 1, 2013 /CNW/ -(TSX:NFI; TSX:NFI.DB.U) New Flyer Industries
Inc. ("New Flyer" or the "Company") announced today that it has acquired
certain assets from Daimler Buses North America ("DBNA") relating to its Orion
aftermarket parts business for heavy-duty transit buses.
DBNA's Orion parts business generated revenue in 2012 of approximately $54
million, a portion of which was from supporting the nearly 10,000 Orion buses
currently in operation in Canada and the United States. The purchase price for
the assets was approximately $29 million (which includes an estimated $6.5
million for the purchase of accounts receivable) and is subject to
post-closing adjustments for working capital which are normal and customary
for these types of transactions. The purchase price was funded by using
proceeds from the recently announced equity investment by Marcopolo S.A., one
of the world's leading global bus manufacturers, which made the first tranche
of its investment in New Flyer, totaling C$51.7 million, on February 15, 2013.
Under the terms of the transaction with DBNA, New Flyer has:
-- acquired DBNA's Orion aftermarket parts inventory, accounts
receivable and assumed certain obligations under its parts
contracts with transit customers,
-- acquired an exclusive license to use DBNA's proprietary part
designs for Orion buses in connection with New Flyer's
aftermarket parts business, and
-- entered into an arrangement under which New Flyer will be the
exclusive supplier of parts required by DBNA for customer
warranty support, under Orion bus purchase contracts and
pre-closing parts contracts.
The companies have also entered into a transition services agreement for an
interim period following the purchase, during which time the business will be
prudently and efficiently integrated into New Flyer's business systems and
four existing parts distribution centers in Canada and the US.
"This announcement follows on the co-operative relationship we have developed
with Daimler Buses North America," explained Paul Soubry, New Flyer's
President and Chief Executive Officer. "In the last eight months we have
assumed two Orion bus manufacturing contracts: one for New York City Transit
and the other for King County Metro in Seattle for a total of 194 firm bus
orders and options for an additional 291 buses (for a total of 485 equivalent
units)." Mr. Soubry went on to explain, "This acquisition is consistent with
our strategic plan and enables New Flyer to further diversify and grow our
aftermarket parts business."
Bernd Voigt, President and CEO of Daimler Buses North America added, "It was
important to DBNA that we have a market leader such as New Flyer supporting
the Orion buses currently in service in Canada and the US with high quality
parts and proven service. Further, DBNA required a reliable source of spare
parts as we fulfill our bus warranty and support obligations to Orion
customers under bus purchase contracts. Together with New Flyer, we will
make sure a robust service infrastructure continues to provide a high level of
service and support."
New Flyer will provide further details and insights into its transition and
integration plan as part of the next investor call scheduled for 9:00 am
(Eastern time) on March 22, 2013, following the release of its 2012 year-end
results. Orion customers will receive direct communication from DBNA and New
Flyer regarding the transition of the business, and are asked to continue
working directly with the Orion Aftermarket Parts Service Organization as
usual, until further advised.
CIBC World Markets acted as financial advisor to the Company.
NOTE: All dollar amounts are stated in US currency, unless otherwise noted.
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 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, LNG, CNG and electric trolley as well as
energy-efficient diesel-electric hybrid 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
The common shares and convertible unsecured subordinated debentures of New
Flyer are traded on the Toronto Stock Exchange under the symbols NFI and
This press release may contain forward-looking statements relating to expected
future events, including the parts supply and licensing arrangements between
New Flyer and DBNA, the integration of the acquired business into New Flyer's
existing business, the diversification and growth of New Flyer's aftermarket
parts business and the accretive effects of the transaction to earnings and
cash flow of New Flyer. 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 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 Tel: 204-224-1251
SOURCE: New Flyer Industries Inc.
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-0- Mar/01/2013 13:59 GMT
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