Blue Bird, an independent designer and manufacturer of school buses, refinanced its $160 million term loan and $75 million revolving line of credit.

The new credit facility, led by Bank of Montreal as administrative agent and an issuing bank, reduces the company’s effective interest rate paid by approximately four points and is expected to save the company approximately $4 million in fiscal year 2017.

“This refinancing is in line with our strategic objective to reduce the cost of our debt and improve our credit profile. This, together with continued solid earnings growth, strengthens the company as we build on our market-leading brand,” said Phil Tighe, CFO of Blue Bird.

Fifth Third Bank served as co-syndication agent and an issuing bank. JPMorgan Chase, Bank of the West and Bank of America were co-documentation agents. BMO Capital Markets, Fifth Third and Regions Capital Markets were joint bookrunners and joint lead arrangers.

Blue Bird has sold more than 550,000 buses since its formation in 1927.