Blue Bird, a company in low and zero emission school buses, closed a new $600 million senior secured credit facility. The new facilities replace the company’s existing $250 million facilities and extend the maturity from November 2028 to September 2031.
The new credit agreement consists of a $300 million revolving credit facility and a $300 million delayed draw term loan facility. Borrowings under the delayed draw term loan facility are available for up to 24 months after closing or until the full $300 million has been drawn, whichever occurs first, and may be used to refinance existing debt and to primarily fund capital projects, research and development, and working capital. At closing, Blue Bird had ~$86 million of carry-over debt drawn under the new facilities and $670+ million of available liquidity.
Compared with the prior facilities, the new agreement increases total committed capacity from $250 million to $600 million. It lowers the interest rate margin to SOFR plus 1.25% to 2.25%, based on leverage, from SOFR plus 1.75% to 3.25%, and eliminates the prior 0.10% credit spread adjustment. The agreement also raises the maximum total net leverage ratio to 3.25x, with a temporary 0.50x step-up for four quarters following a qualifying acquisition of $75 million or more, and expands the accordion feature to the greater of $250 million or 1.0x trailing twelve-month EBITDA, plus additional amounts subject to a leverage test.
BMO acted as administrative agent, joint lead arranger, and joint bookrunner for the transaction. Bank of America served as syndication agent, joint lead arranger and joint bookrunner, while CIBC Bank USA, Fifth Third Bank, Regions Bank and TD Bank served as joint lead arrangers and joint bookrunners.
“While Blue Bird already has a very strong balance sheet, this refinancing more than doubles our available borrowing capacity, lowers our cost of debt and extends maturity out to 2031,” Razvan Radulescu, chief financial officer of Blue Bird, said. “It gives us the flexibility to continue to invest in our operations and product development, while maintaining a conservative balance sheet. We appreciate the strong support from our bank group, led by BMO.”
