Business Context and Reporting Period
This Form 8-K was filed by PBF Energy Inc. and PBF Energy Company LLC on August 2, 2018. The report details a material definitive agreement entered into on July 30, 2018, by PBF Logistics LP, an indirect subsidiary of PBF Energy Inc.
Key Financial Metrics and Debt Structure
The filing focuses on the establishment of a new credit facility rather than operational financial results. Key terms include:
- Facility Size: $500.0 million amended and restated revolving credit facility.
- Expansion Option: Ability to increase the facility by up to $250.0 million, for a total potential size of $750.0 million.
- Sublimits: $75.0 million for standby letters of credit and $25.0 million for swingline loans.
- Maturity: July 30, 2023, with an option to extend for one year on up to two occasions.
- Interest Rates: Base Rate plus 0.75% to 1.75%, or LIBOR plus 1.75% to 2.75%, based on leverage ratios.
- Collateral: Secured by a first priority lien on the Partnership's and its restricted subsidiaries' assets.
Material Changes Versus Prior Period
The new facility amends and restates a previous five-year $360.0 million revolving credit facility entered into on May 14, 2014. The primary material change is the increase in total available credit from $360.0 million to $500.0 million, with an option to expand further to $750.0 million.
Guidance, Covenants, and Risks
The agreement imposes specific financial covenants commencing with the measurement period ending September 30, 2018:
- Consolidated Interest Coverage: At least 2.50 to 1.00.
- Consolidated Total Leverage: Not greater than 4.50 to 1.00.
- Consolidated Senior Secured Leverage: Not greater than 3.50 to 1.00.
The agreement includes standard negative covenants restricting the ability to incur additional debt, liens, or make restricted payments. Events of default include failure to pay principal or interest, breach of covenants, and insolvency proceedings. PBF Energy Company LLC has provided a guaranty for the facility obligations, payable only after specific conditions regarding default and exhaustion of remedies are met.
Investor Verification Checklist
- Verify the current utilization of the $500.0 million facility and any drawdowns since July 30, 2018.
- Confirm the Partnership's compliance with the new leverage and interest coverage covenants as of the September 30, 2018 measurement period.
- Review the full text of the Amended and Restated Revolving Credit Agreement (Exhibit 10.1) for specific definitions of leverage ratios and restricted payments.
- Assess the impact of the increased debt capacity on the company's overall capital structure and liquidity position.