Harvest Partners

New Flyer Industries, Ltd.

• Business

  New Flyer Industries, Ltd. (“New Flyer”) was a leading manufacturer of heavy-duty transit buses in the United States and Canada. New Flyer held the number one market share position in both the United States and Canada based on installed buses and annual deliveries.

• Situation

  Harvest sourced New Flyer through a sale process that garnered little interest due to: (i) a negative perception of investing in an industry that was 80% funded by federal budgets and the remainder dependent on municipal budgets; (ii) a lack of confidence that the required surety bonding would be available; (iii) a poor track record of other private equity firms in investing in the bus manufacturing industry; (iv) a competitive bidding process for new contracts; and (v) customer concentration. Through extensive due diligence, Harvest uncovered attractive features of the investment including New Flyer’s significant free cash flow generation, order visibility due to its backlog and the trend towards more fuel efficient buses.

• Harvest Partners Investment

  In February 2004, Harvest purchased New Flyer with the existing management team. To fund the acquisition Harvest arranged the debt financing, which included a senior credit facility and a mezzanine note. In addition, Harvest arranged equity co-investment capital for the transaction.

• Investment Thesis

  • Market leader
  • Attractive business model and significant free cash flow generation
  • Replacement-driven industry with favorable product trends

• Value Creation

  • Disciplined operational execution
  • Improved product mix
  • Intense balance sheet management

• Outcome

  • Completed an IPO on the Toronto Stock Exchange in August 2005
  • Realized investment proceeds through dividends received after the IPO and the sale of shares on the open market