Current Price – $26
Merger Consideration – $28
Upside – 8% ($200 for odd lot holders)
Expiration Date – October 15th, 2018
This is a straight forward odd-lot tender. Blue Bird is buying back $50m of common and preferred shares. Common shares will be cashed out at $28/shares. Overall this buyback represents 6.6% of outstanding and the offer is expected to be oversubscribed. Tenders from odd-lot holders will be accepted on priority basis and not subject to proration.
So buying 99 shares and tendering allows to pick $200 from the sidewalk (if tender happens on current terms).
This tender is subject to financing, which will be arranged as an amendment and additional commitments under existing credit agreement. Keeping in mind stable company performance, relatively low amounts of debt (around 2x ad.EBITDA), high interest coverage (2.78x). I think financing is just a formality and will be arranged in time.