Blue Bird gets commitments for $50 million incremental term loans

By Marisa Wong

Morgantown, W.Va., Sept. 14 – Blue Bird Corp. entered into an amendment on Sept. 13 to its credit agreement dated Dec. 12, 2016 with Bank of Montreal as administrative agent for an aggregate lender commitment of $50 million of additional term loan borrowings that will remain outstanding through Oct. 31, according to an 8-K filing with the Securities and Exchange Commission.

Blue Bird intends to use the incremental term loan to help finance a tender offer to purchase shares of its common stock and convertible preferred stock. The company has launched a tender offer to purchase up to $50 million in aggregate value of its common stock and 7.625% series A convertible cumulative preferred stock, according to a Friday press release.

The funding of the incremental term loan is subject to some closing conditions, according to the 8-K. The tender offer is conditioned on the receipt of financing, the company noted in the press release.

The amendment to the credit agreement also provides for $25 million of additional revolving credit commitments.

BMO Capital Markets Corp. acted as lead arranger and bookrunner for the incremental facilities.

Under the amendment, the existing $160 million term loan facility, of which $148 million remains outstanding, and the existing $75 million revolving credit facility, will each mature on Sept. 13, 2023.

The amended credit facility bears interest at Libor plus 225 basis points. Beginning with the fiscal quarter ended on or about Sept. 30, pricing will be based on the company’s total net leverage ratio, with the Libor spread ranging from 175 bps to 300 bps.

Under the amended credit agreement, the principal of the term loan (the initial $160 million and the $50 million incremental loan) must be paid in quarterly installments of $1.85 million on the last day of the company’s third fiscal quarter in 2018; $2,475,000 per quarter beginning on the last day of the fourth fiscal quarter in 2018 through the last day of the third fiscal quarter in 2021; $3,712,500 per quarter beginning on the last day of the fourth quarter in 2021 through the last day of the third quarter in 2022; and $4.95 million per quarter beginning on the last day of the fourth quarter in 2022 through the last day of the second quarter in 2023, with the remaining balance due at maturity.

Up to $75 million of additional term loans or revolving credit commitments may be incurred under the amended credit agreement.

The credit agreement includes an amended financial maintenance covenant, which requires compliance with a maximum total net leverage ratio of 4.00 times from the date of the amendment through the quarter ending on or about June 30, 2019, 3.75 times from the quarter ending Sept. 30, 2019 through the quarter ending Sept. 30, 2021 and 3.50 times after that.

Based in Fort Valley, Ga., Blue Bird designs and manufactures school buses.

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