WINNIPEG, Dec. 7, 2015 /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 the United States and Canada acknowledges the Fixing America's Surface Transportation Act ("FAST") was approved and signed into law by the U.S. President Barack Obama on Friday, December 4, 2015.
FAST is the first transportation funding legislation to last longer than two years since 2005 and authorizes the funding for U.S. federal surface transportation programs through to September 30, 2020. The Act reforms and strengthens transportation programs, provides long-term funding certainty and more flexibility for states and local governments, streamlines project approval processes, and maintains a strong commitment to safety.
FAST increases the current annual public transportation funding from US$10.7 billion to US$12.6 billion by 2020. Buses can be purchased by public agencies using a variety of programs under the Act such as; Bus and Bus Facilities, State of Good Repair, and Urbanized Area formula and others. The Act also includes increased funding for "clean technology" and low or zero emission buses as demonstrated by the creation of $55 million of annual "low or no emission" competitive grants.
The U.S. federal government will continue to fund 80% of the capital cost of a new bus, however the funding period carryover is decreased to three years from the current five year limit. New Flyer believes this carryover reduction may result in the continued increase in the number of procurements issued by agencies, but with a lower number of total options included under each procurement.
FAST also includes a provision that creates a pilot program to allow up to three nonprofit agencies to host co-operative procurement contracts that can be interstate in nature. These are intended to be separate from the state co-operative purchasing contracts that currently exist and provide another opportunity for public transportation systems of all sizes to enhance their purchasing options as well as take advantage of cost reductions through larger procurements.
As expected, FAST increases the "Buy America" content requirement for transit rolling stock from the current level of 60 percent to 65 percent in 2018 and to 70 percent in 2020. The "Buy America" regulations require that buses meet the following fundamental requirements to be eligible for funding from the United States federal government: (i) the bus must contain a minimum percentage of United States content by cost, and (ii) final bus assembly/manufacture must occur within the United States. Only the percentage of U.S. domestic content is being amended under FAST and the rules relating to final assembly remain unchanged. New Flyer expects to remain in compliance with these phased increases in U.S. domestic content under FAST.
"We are very pleased with this new long-term legislation as it now provides our customers with confidence to establish multi-year capital spending and fleet replacement plans for an aging fleet", said Paul Soubry, New Flyer's President and Chief Executive Officer. "FAST adds significant stability to the market for heavy-duty transit buses and the public portion of the motor coach sector".
About New Flyer
New Flyer is the leading manufacturer of heavy-duty transit buses in the United States and Canada. The Company is the industry technology leader and offers the broadest product line of transit buses including drive systems powered by: clean diesel, natural gas, diesel-electric hybrid, electric trolley and now, battery-electric. All buses are supported by an industry-leading comprehensive warranty and support program, and service network. New Flyer also operates the industry's most sophisticated aftermarket parts organization, sourcing parts from hundreds of different suppliers and providing support for all types of transit buses.
The New Flyer group of companies employ over 3,300 team members with manufacturing, fabrication, parts distribution and service centers in both Canada and the United States. Over 32,000 New Flyer and NABI heavy-duty transit buses are in operation today. Further information is available on New Flyer's website at http://www.newflyer.com
On November 10, 2015 New Flyer announced that it has entered into a definitive agreement to acquire North America's leading motor coach manufacturer and parts and service supplier Motor Coach Industries International, Inc. ("MCI"). The completion of the transaction is subject to customary closing conditions including U.S. antitrust and Canadian Competition Act approvals and is expected to close by the end of 2015.
New Flyer's common shares and convertible unsecured subordinated debentures of the Company 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 and financial and operating results of the Company that involve risks and uncertainties. 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 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, the Company may not be able to meet these new Buy America requirements, risks related to the satisfaction of the relevant closing conditions for and the completion of the purchase of MCI, the completion of the new credit facilities being entered into in connection with the purchase of MCI and the timing thereof, the availability of funds from the new credit facilities for the funding of the purchase price for and related expenses related to the purchase of MCI 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.
SOURCE New Flyer Industries Inc.