Business Context and Reporting Period
This Form 8-K filing by PBF Energy Inc. (PBF Energy) reports on events occurring on October 6, 2017. The filing details a material definitive agreement entered into by PBF Logistics LP, a consolidated subsidiary of PBF Energy, regarding the issuance of new senior notes.
Key Financial Metrics and Transaction Details
- Debt Issuance: PBF Logistics LP issued $175.0 million in aggregate principal amount of 6.875% Senior Notes due 2023.
- Net Proceeds: Approximately $175.0 million, after deducting initial purchasers' discounts and estimated offering expenses.
- Use of Proceeds: Repayment of a portion of indebtedness under the Partnership's revolving credit facility and for general partnership purposes.
- Interest Terms: Interest accrues at 6.875% per year, payable semi-annually on May 15 and November 15, commencing November 15, 2017.
- Maturity Date: May 15, 2023.
- Guarantees: The notes are guaranteed on a senior unsecured basis by all existing subsidiaries (excluding PBF Logistics Finance Corporation) and certain future restricted subsidiaries. PBF Energy Company LLC (PBF LLC) provided a limited guarantee of collection.
- Ranking: The notes are general senior unsecured obligations, equal in right of payment to existing senior indebtedness (including the revolving credit facility and existing 6.875% Senior Notes). They are effectively subordinated to secured debt and structurally subordinated to indebtedness of non-guarantor subsidiaries.
Material Changes Versus Prior Period
The filing does not provide comparative financial performance data (revenue, profit, or cash flow) for the period. The material change reported is the expansion of the existing 6.875% Senior Notes due 2023 series by an additional $175.0 million, increasing the total outstanding principal of this specific note series to $525.0 million (combining the new issuance with the previously issued $350.0 million).
Guidance, Outlook, Risks, and Covenants
- Covenants: The Indenture includes customary covenants for non-investment grade debt, limiting the ability to make investments, incur additional indebtedness, pay dividends, create liens, sell assets, or merge, subject to exceptions.
- Redemption Rights:
- Before May 15, 2018: Issuers may redeem up to 35% of the notes using net cash proceeds from equity offerings at 106.875% of principal. A "make-whole" redemption is also available prior to this date.
- On or after May 15, 2018: Issuers may redeem all or part of the notes at prices described in the Base Indenture.
- Change of Control: Holders have the right to require the Issuers to purchase the notes at 101% of the aggregate principal amount if certain change of control events occur.
- Asset Dispositions: Net cash proceeds from certain asset dispositions must be used to offer to purchase the notes at 100% of principal, subject to reinvestment rights.
- Trading Status: The new notes will initially trade separately from the existing notes under different CUSIP numbers but will vote as one class. They are expected to become fungible following a future registered exchange offer.
Important Facts for Investor Verification
- Verify the exact amount of the revolving credit facility repaid with the $175.0 million proceeds.
- Confirm the specific terms of the "make-whole" redemption price and the post-May 2018 redemption schedule in the Base Indenture.
- Review the full text of the Amended and Restated Guaranty of Collection to understand the limitations of PBF LLC's guarantee of collection.
- Monitor the timeline for the registered exchange offer intended to make the new and existing notes fungible.
- Assess the impact of the new debt covenants on the company's ability to pay dividends or make future distributions.