New Gold to buy back $50-million of debt

NEW GOLD REDUCES DEBT POSITION BY C$50 MILLION

New Gold Inc. has agreements with certain noteholders that will reduce its debt position by $50-million through the buyback of a portion of its senior secured notes with a face value totalling $50-million for consideration of $30-million.

The purchase and cancellation of these notes reduce New Gold's senior secured notes debt from $237-million to $187-million, and results in a reduction of $5-million per year in interest payments. This transaction will also results in an estimated pretax gain of approximately $14-million (U.S.) in the first quarter of 2009.

Robert Gallagher, president and chief executive officer, said, "The opportunity to purchase $50-million of our outstanding debt at a considerable discount to face value significantly strengthens our balance sheet and is consistent with our strategy to maintain a solid financial position."

As a result of this transaction, New Gold's total debt will be reduced to $242-million which comprises $187-million of the senior secured notes at an interest rate of 10 per cent, expiring June, 2017, and $55-million of the convertible debentures at an interest rate of 5 per cent, expiring June, 2014. New Gold had previously reported that as of Sept. 30, 2008, it had cash and cash equivalents of $251-million (U.S.).

We seek Safe Harbor