Westport Innovations Inc.

Westport Innovations Inc.

January 10, 2007 09:01 ET

Perseus, L.L.C. Exercises Option to Complete Second Tranche of $22.1 Million Strategic Investment in Westport

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Jan. 10, 2007) - Westport Innovations Inc. (TSX:WPT), a global leader in gaseous-fuelled power technologies, today received notification that two investment funds managed by Perseus, L.L.C. intend to exercise their option to complete the approximately $8.3 million second tranche of the $22.1 million investment in Westport announced in June of 2006. The closing of the second tranche is expected to occur on or before January 16, 2007. $8,284,500 principal amount of convertible notes ("Notes") will be issued upon closing with a conversion price of $1.40 per share.

Under the terms of the originally executed investment agreement, Westport agreed to issue approximately $22.1 million in aggregate principal amount of convertible notes to Perseus, of which $13.8 million has been received and approximately $8.3 million will be advanced on or before January 16, 2007. Interest will accrue at 8% of the amount advanced. Interest on the second tranche Notes can be paid at the option of Westport in notes, shares, or cash. The Notes can be converted to common shares no later than five years from the closing of the first tranche. In connection with the issuance of the Notes, Perseus will receive warrants to purchase up to 1,479,375 common shares of Westport exercisable at $1.40 for a four-year term. Under the terms of the original agreement, Perseus has a right of first refusal to invest up to an additional US$10 million in Westport.

About Perseus, L.L.C.

Perseus, L.L.C. is a private equity fund management company headquartered in Washington, D.C., with an office in New York and affiliate offices in Munich and New Delhi. Founded in 1995, Perseus invests in companies with which it can participate in the strategic planning, operations and development and thereby add significant value to the investment. Perseus and its affiliates manage seven investment funds with capital commitments totalling over US$1.5 billion. All references in this press release to Perseus are intended to refer to Perseus, L.L.C. and its managed investment funds. www.perseusllc.com

About Westport Innovations Inc.

Westport Innovations Inc. is a leading global supplier of alternative fuel power technologies that allow engines to operate on clean-burning fuels such as natural gas, hydrogen, and hydrogen-enriched natural gas (HCNG). Westport has technology development alliances in place with Cryostar, Cummins, Ford, BMW, and Isuzu, as well as an ownership interest in Clean Energy, the largest provider of natural gas for vehicles in North America. Cummins Westport Inc., Westport's joint venture with Cummins Inc., manufactures and sells the world's widest range of low-emissions alternative fuel engines for commercial transportation applications such as trucks and buses. BTIC Westport Inc., Westport's joint venture with Beijing Tianhai Industry Co. Ltd., manufactures and sells liquefied natural gas (LNG) fuel tanks for vehicles. www.westport.com

Note: This document contains forward-looking statements about Westport's business, operations, technology development or the environment in which it operates, which are based on Westport's estimates, forecasts and projections. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict, or are beyond Westport's control. Consequently, readers should not place any undue reliance on such forward-looking statements. In addition, these forward-looking statements relate to the date on which they are made. Westport disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

All references to $ in this release shall mean Canadian Dollars, unless specifically provided otherwise.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

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