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Blue Bird Corp (BLBD): Spitfire Capital Fires Letter To The Board, Still Opposes Takeover

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Julian Allen‘s Spitfire Capital has recently sent a letter to the Board of Blue Bird Corp (NASDAQ:BLBD), urging it to dismiss American Securities LLC’s interest in the company. The letter was attached to a filing with the Securities and Exchange Commission, and, together with a presentation, makes the case for Blue Bird to remain a publicly-traded entity and backs the current management to continue running the company. The fund holds 1.52 million shares or 7.3% of the common stock and is the company’s third largest shareholder.

According to the letter, the recovery of the US school bus industry, in which Blue Bird Corp (NASDAQ:BLBD) has a solid footing, has allowed the company to diversify its product mix and reach a market share of roughly 30%. The fund argues that Blue Bird’s substantial free cash flow levels and a non-capital-intensive business model will allow it to repay all its current debts by the end of 2018, freeing the management to pursue other growth strategies after that.

Julian Allen and his team argue that the proposal to sell the Blue Bird for $12.80 to $13.10 per share significantly undervalues the company. “The Proposal provides no value to stockholders for the Company’s revenue growth or improving margins. Equally, the Proposal provides no value for the free cash flow generation outlined above,” reads the letter. Spitfire has estimated near term value of the stock to range between $22 and $28 per share.

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At the end of the first quarter, roughly 83% of Blue Bird Corp (NASDAQ:BLBD) was held by 9 of the hedge funds tracked by Insider Monkey, unchanged during the quarter. The current contender,  American Securities LLC’s ASP BB Holdings has acquired its 57.15% stake from Stephen Feinberg’s Cerberus Capital Management after the end of the first quarter. Christopher Shackelton and Adam Gray’s fund, Coliseum Capital, also held a sizable position, which amounted to 2.62 million shares according to its latest 13F filing.

You can access the original SEC filing by clicking here.

Ownership Summary Table

Name Sole Voting Power Shared Voting Power Sole Dispositive Power Shared Dispositive Power Aggregate Amount Owned Power Percent of Class
Spitfire Capital 1,523,601 0 1,523,601 0 1,523,601 7.3%
Julian A.L. Allen 1,523,601 0 1,523,601 0 1,523,601 7.3%
Julian Allen
Julian Allen
Spitfire Capital

Page 1 of 26 – SEC Filing

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 13D/A

Under the Securities Exchange Act of
1934

(Amendment No. 1)

Blue Bird Corporation

(Name of Issuer)

Common Stock par value $0.0001 per share

(Title of Class Securities)

095306106

(CUSIP Number)

Julian A.L. Allen

Spitfire Capital, LLC

222 Front Street, Suite 401

San Francisco, CA 94111

(415) 878-1901

(Name, Address and Telephone Number of
Person Authorized to Receive Notices and Communications)

August 1, 2016

(Date of Event Which Requires Filing of
this Statement)

If
the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box x.

Note:
Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See ss.240.13d-7
for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out
for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment
containing information which would alter the disclosure provided in a prior cover page.

The
information required in the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section
18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the Notes).

Potential
persons who are to respond to the collection of information contained in this form are not required to respond unless the form
displays a current valid OMB control number.

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