Student Transportation has entered into two transactions: an amended and increased senior credit facility with a new five-year term, a portion of which will be used to repurchase its outstanding senior secured notes plus the ‘call’ and the refinance of its subordinated convertible debentures that also lower total interest expense for the company.

“We were very pleased with the tremendous support from our longstanding bank group, led by BMO Harris Bank, which has been our senior credit facility agent since I started the company 19 years ago. The new credit facility was significantly oversubscribed and demonstrates our strong credit profile and the credit market’s confidence in our stable, predictable business model and strategy,” said STI Chairman and CEO Denis Gallagher.

The amended and restated revolving line of credit increases commitments from the current $225 million to $340 million ($290 million plus C$50 million) and has been extended for a five-year period, now expiring in July 2021. The revolving line of credit is available on an ‘as needed’ basis for general working capital and growth. At fiscal year end, the company had approximately $120 million outstanding on the line.

The new credit facility also includes a current $100 million accordion feature, providing access to additional debt commitments, if needed. STI was able to maintain the low market rate package and financial covenants negotiated in 2014, while gaining more favorable terms with respect to certain other covenants in the agreement. Two new banks entered the syndicate and all seven of the existing banks re-committed to the deal, with six of the seven banks increasing their commitment levels.

The company will use drawings under the credit agreement to repurchase the $35 million 4.246% senior secured notes maturing in November 2016 currently outstanding. This will result in interest cost savings of up to $700,000 annually.

Founded in 1997, Student Transportation (STI) is North America’s largest independent provider of student transportation solutions, operating more than 13,500 vehicles.