Blue Bird enters five-year $235 million two-tranche credit agreement

By Wendy Van Sickle

Columbus, Ohio, Dec. 15 – Blue Bird Corp. and some of its subsidiaries entered into a five-year $235 million credit agreement on Tuesday, according to an 8-K filing with the Securities and Exchange Commission.

Blue Bird Body Co. is the borrower, and Blue Bird Corp. School Bus Holdings, Inc., Peach County Holdings, Inc. and Blue Bird Global Corp. are the guarantors.

BMO Capital Markets Corp., Fifth Third Bank and Regions Capital Markets acted as joint bookrunners and joint lead arrangers; Bank of Montreal as administrative agent; Fifth Third and Regions Bank as co-syndication agents; and JPMorgan Chase Bank, NA, Bank of the West and Bank of America, NA as co-documentation agents.

The credit agreement provides for a $160 million term loan and a $75 million revolving credit facility, which has a $15 million sub-facility for letters of credit and a $5 million sub-facility for swingline loans.

Interest on is initially Libor plus 200 basis points with a 1% Libor floor. Beginning April 1, the margin above Libor may range from 175 bps to 250 bps, depending on total net leverage ratio.

There is an accordion feature allowing up to $75 million of additional revolving or term loans.

Principal of the term loan must be paid in quarterly installments of $2 million beginning on the last day of the company’s second fiscal quarter in 2017 through the last day of the first fiscal quarter of 2020, stepping up to $3 million through the last day of the first fiscal quarter in 2021, then to $4 million a quarter, with the balance due at maturity.

Blue Bird must comply with a maximum total net leverage ratio of 4 times through the third fiscal quarter of 2017, stepping down to 2.75 times through the first fiscal quarter of 2019 and to 3.5 times thereafter.

At closing, some proceeds were used to refinance existing debt and pay related costs, and additional proceeds may be used for working capital and other general corporate purposes.

The credit agreement matures on Dec. 12, 2021.

Fort Valley, Ga.-based Blue Bird is a designer and manufacturer of school buses.

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