Business Context and Reporting Period
This Form 8-K, dated May 5, 2015, reports a material definitive agreement entered into by PBF Energy Inc. and its subsidiaries. The filing details a transaction between PBF Energy Company LLC ("PBF LLC") and PBF Logistics LP (the "Partnership") involving the contribution of logistics assets to the Partnership.
Key Financial Metrics and Transaction Details
- Total Consideration: $143.0 million.
- Payment Structure: $112.5 million in cash and $30.5 million in Partnership common units (1,288,420 units).
- Assets Contributed:
- Delaware Pipeline Company LLC ("DPC"): Owner of the Delaware City Products Pipeline (23.4 miles, 16-inch, capacity >125,000 bpd).
- Delaware City Logistics Company LLC ("DCLC"): Owner of a 15-lane truck loading rack (76,000 bpd capacity).
- Funding Sources for Cash Consideration:
- $40.0 million from expected financing transactions.
- $71.8 million from borrowings under the Partnership's revolving credit facility.
- $0.7 million from the sale of marketable securities.
Material Changes and Agreements
The transaction represents a significant restructuring of logistics assets within the PBF Energy family. Upon closing, PBF Holding will distribute equity interests in DPC and DCLC to PBF LLC, which will then contribute them to the Partnership. The filing notes the execution of three key ancillary agreements:
- Pipeline Services Agreement: 10-year term with a minimum throughput commitment of approximately 50,000 bpd.
- Terminaling Services Agreement: 10-year term with minimum throughput commitments of approximately 30,000 bpd for gasoline/diesel/heating oil and 5,000 bpd for propane/propylene.
- Amendments: Updates to the Partnership's Omnibus Agreement and Operation and Management Services Agreement.
Outlook, Risks, and Contingencies
Closing Conditions: The transaction is expected to close on or about May 15, 2015, subject to customary conditions and the receipt of proceeds from expected financing transactions.
Risks and Forward-Looking Statements: The filing includes standard disclaimers regarding forward-looking statements, noting that actual results may differ due to risks and uncertainties beyond the Company's control. Investors are cautioned not to rely on representations and warranties in the Contribution Agreement as statements of fact, as they may be qualified by disclosure schedules and materiality standards different from those applicable to investors.
Investor Verification Checklist
- Verify the successful receipt of the $40.0 million in proceeds from expected financing transactions required for closing.
- Confirm the execution of the 10-year minimum throughput commitments in the pipeline and terminaling services agreements.
- Monitor the actual closing date to ensure it occurs on or about May 15, 2015.
- Review the full text of the Contribution Agreement (Exhibit 10.1) for specific representations, warranties, and disclosure schedules.