Student Transportation of America Announces Expiry of Exchange Offer



    51% of Aggregate Principal Amount of Subordinated Notes Tendered

    /NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN
    THE U.S./

    TORONTO, Sept. 4 /CNW/ - Student Transportation of America Ltd. ("STA
Ltd.") and Student Transportation of America ULC ("STA ULC" and, together with
STA Ltd., "STA") announced today that Cdn $45.8 million aggregate principal
amount of subordinated notes of STA ULC had been validly deposited to its
previously announced exchange offer (the "Exchange Offer"). The Exchange Offer
terminated at 5:00 p.m. EDT today, and will not be extended.
    Under the Exchange Offer, STA offered holders of subordinated notes of
STA ULC ("Notes") 0.67 common shares 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 income participating security).
    STA has also announced that, as all conditions of the Exchange Offer have
been satisfied, it has taken up and accepted for payment, all Notes so
deposited, which represent approximately 51% of the issued and outstanding
Notes on a fully diluted basis. Payment for Notes taken up today will be made
on or before September 7, 2007. As a result of the exchange, the company will
have a majority of common shares (TSX: STB) outstanding versus IPS units and
will have reduced its total debt by approximately $45.8 million.
    "We are pleased the exchange offer was widely received by Unitholders.
STA has always had a common share as part of the IPS unit. We believe this
exchange and the eventual exchange of the balance of the notes, which are
callable in December 2009, will create common share liquidity and provide
shareholders with an attractive monthly Canadian qualified dividend as well
participation in the continued growth of the company," said Denis J.
Gallagher, Chairman and Chief Executive Officer for STA. "The IPS structure
was a good vehicle for us to enter the public market in 2004 but it is not
well understood by many investors outside of the institutional investment
community. This exchange will simplify our capital structure, enhance
liquidity and allow us to attract new shareholders," added Gallagher.
    STA has achieved a 22% compounded annual growth rate of revenues for the
past five years and has paid 31 consecutive monthly dividends since the
Company's IPO in December 2004. Based on today's closing price of the common
shares, the dividend yield is approximately 8.2%.
    Wellington West Capital Markets advised the Company on the exchange
offer.
    Further information regarding the Exchange Offer is available in the
Exchange Offer circular, which is available on SEDAR at www.sedar.com.

    Profile

    Student Transportation is the fifth-largest provider of school bus
transportation services in North America, conducting operations through local
operating subsidiaries. Student Transportation has become a leading school
transportation and management company by aggregating operations through the
consolidation of existing providers and conversion of in-house operations and
currently operates more than 4,500 school vehicles in North America. For more
information, please visit www.sta-ips.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, including the acquisition of notes under 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 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 acquisition of less than a significant
number of notes under the Exchange Offer and 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.





For further information:

For further information: Denis J. Gallagher, Chairman and Chief
Executive Officer, Phone (732) 280-4200, Fax: (732) 280-4213; Patrick J.
Walker, Chief Financial Officer, Phone (732) 280-4200, Fax: (732) 280-4213;
Keith P. Engelbert, Director of Investor Relations, Phone: (732) 280-4200,
Fax: (732) 280-4213, kengelbert@sta-ips.com

Organization Profile

STUDENT TRANSPORTATION INC.

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STUDENT TRANSPORTATION OF AMERICA ULC

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