Hennessy Capital Acquisition Corp. announced it has entered into a definitive purchase agreement to acquire all of the outstanding capital stock of School Bus Holdings Inc., an indirect parent company of Blue Bird Corporation, from The Traxis Group B.V., which is majority owned by funds affiliated with Cerberus Capital Management, L.P..

Blue Bird is the leading independent designer and manufacturer of school buses, with more than 550,000 buses sold since its formation in 1927 and nearly 200,000 buses in operation today. In addition, Blue Bird is the fastest‐growing major school bus manufacturer in North America, with market share increasing in each of the past four years, and is the market leader in alternative‐fuel applications with its propane‐powered and compressed natural gas‐powered school buses.

“HCAC is extremely pleased to partner with Blue Bird’s management and Cerberus to introduce Blue Bird to the public markets,” said Daniel J. Hennessy, Chairman and CEO of HCAC. “We are acquiring an iconic American brand with an 87‐year history of innovation and product leadership led by a superb management team at a very attractive price. We believe Blue Bird fits squarely into our stated investment criteria, and that as a public company, Blue Bird will have the capital structure, ownership support, operating flexibility and enhanced public image to achieve its maximum potential.”

Chan Galbato, CEO of Cerberus Operations and Advisory Company, LLC, and non‐executive Chairman of Blue Bird, stated, “Blue Bird is a terrific, well‐run company with great people and products and we are thrilled to continue our longstanding relationship with them, as Cerberus will retain a significant ownership interest in the company. We look forward to sharing in the significant value‐creation opportunity that Blue Bird offers, in partnership with HCAC, Blue Bird’s management and our new stockholders.”

The Company will continue to be led by current Blue Bird President and CEO Phil Horlock, who added, “We are very excited for Blue Bird to become a public company by partnering with HCAC and delighted that Cerberus will remain a major stockholder. Under Cerberus’ stewardship, our Blue Bird team has transformed the business through launching exciting new products and features, improving quality and cost structure, and growing sales and market share. We believe this transaction will enable us to maintain our growth momentum with our exceptional workforce building the world’s finest school bus.”

Transaction Details

Under the terms of the purchase agreement, the aggregate equity purchase price payable at the closing of the proposed transaction will be $255 million comprised of cash and shares of HCAC common stock. In addition, HCAC will assume approximately $235 million of Blue Bird’s existing indebtedness. The purchase price consists of (i) an estimated $140 million in cash (assuming no HCAC stockholder redemptions) and (ii) the issuance of 11.5 million shares of HCAC common stock (subject to increase if the cash paid to Traxis is lower than $140 million). The cash component is expected to be funded by the cash in HCAC’s trust account established in connection with its initial public offering (the “IPO”) and the issuance of $40 million of convertible preferred stock to certain investors in a private placement. Additionally, HCAC has received a commitment from an investor to purchase up to $10 million of HCAC common stock through (i) open market or privately negotiated transactions with third parties, (ii) a private placement with consummation to occur concurrently with the closing of the transaction, or (iii) a combination thereof, in order to ensure sufficient funds to finance the cash component of the purchase price.

The purchase agreement contemplates that the new board of directors of the combined company will consist of six members of Blue Bird’s existing board of directors (including Chan Galbato, who will serve as Chairman of the Board, Phil Horlock, who will continue to serve as CEO, and Dev Kapadia, a Cerberus Managing Director), two current members of HCAC’s board of directors (Daniel J. Hennessy, who will serve as Vice Chairman of the Board, and Kevin Charlton) and one newly designated individual.

At the closing of the proposed transaction, 12,125,000 of the 23,625,000 currently outstanding HCAC warrants will be exchanged for a total of 1,212,500 shares of HCAC common stock, through a combination of (i) a negotiated exchange with HCAC’s sponsor and (ii) an exchange offer by HCAC to exchange up to 50% of the outstanding HCAC warrants issued to public stockholders in the IPO for shares of HCAC common stock. The terms of the sponsor warrant exchange and public warrant exchange offer will be described in HCAC’s proxy statement relating to the proposed transaction, which HCAC will file with the U.S. Securities and Exchange Commission (the “SEC”). HCAC’s exchange offer for its public warrants will be made pursuant to a tender offer statement on Schedule TO (including an offer to exchange and related materials) that HCAC intends to file with the SEC.

The transaction is subject to the satisfaction of customary closing conditions, including regulatory and stockholder approvals, and is expected to close promptly following HCAC’s special stockholders’ meeting to approve the transaction. Upon consummation of the transaction, it is anticipated that Traxis will be the combined company’s principal stockholder, owning approximately 42.4% of HCAC’s outstanding common stock, and HCAC’s existing stockholders will retain an ownership interest of approximately 57.6% (assuming no HCAC stockholder redemptions). It is expected that the combined company’s securities will continue to be listed on NASDAQ.

HCAC was advised on the transaction by BMO Capital Markets Corp., Stifel, Nicolaus & Company Incorporated and XMS Capital Partners, LLC as financial advisors with Sidley Austin LLP and Ellenoff Grossman & Schole LLP as legal counsel. Cerberus, Traxis and Blue Bird were advised by Evercore as financial advisor with Schulte Roth & Zabel LLP and Lowenstein Sandler LLP as legal counsel.