PBF Energy 2012 Annual Report Download - page 113

PBF ENERGY INC. AND SUBSIDIARIES
(COMBINED AND CONSOLIDATED WITH PBF ENERGY COMPANY LLC AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT AND BARREL DATA)
3 - ACQUISITIONS
Toledo Acquisition
On March 1, 2011, a subsidiary of the Company completed the acquisition of the Toledo refinery in Ohio from
Sunoco. The Toledo refinery has a crude oil throughput capacity of 170,000 barrels per day. The purchase price
for the refinery was $400,000, subject to certain adjustments, and was comprised of $200,000 in cash and a
$200,000 promissory note provided by Sunoco. The note was repaid in full in February 2012. The terms of the
transaction also include participation payments beginning in the year ended December 31, 2011 through the year
ending December 31, 2016 not to exceed $125,000 in the aggregate. Participation payments are based on 25% of
the purchased assets’ earnings before interest, taxes, depreciation and amortization, as defined in the agreement
(“EBITDA”) in excess of an annual threshold EBITDA of $125,000 (prorated for 2011 and 2016). Each
participation payment is due no later than one hundred and twenty days after the close of the respective calendar
year end for the years 2011 through 2016. The Company paid $103,643 to Sunoco in April 2012 related to the
amount of contingent consideration earned in 2011.
The Company purchased certain finished and intermediate products for approximately $299,645 with the
proceeds from a note provided by Sunoco (the “Toledo Inventory Note Payable”). The note had an interest rate at
the lower of LIBOR plus 5.5%, or 7.5% and was repaid on May 31, 2011. The Company also purchased crude oil
inventory for $338,395, which it concurrently sold to MSCG for its market value of $369,999. The net cash
received from this transaction was recorded as a reduction in the total purchase price.
The Toledo acquisition was accounted for as a business combination. The purchase price of $784,818 includes
the estimated fair value of future participation payments (contingent consideration). The fair value of the
contingent consideration was estimated using a discounted cash flow analysis, a Level 3 measurement, as more
fully described at Note 17. The following table summarizes the amounts recognized for assets acquired and
liabilities assumed as of the acquisition date.
The total purchase price and the estimated fair values of the assets and liabilities at the acquisition date were as
follows:
Purchase Price
Net cash ....................................... $168,156
Seller promissory note ............................ 200,000
Seller note for inventory ........................... 299,645
Estimated fair value of contingent consideration ........ 117,017
$784,818
Fair Value
Allocation
Current assets ..................................... $305,645
Land ............................................ 8,065
Property, plant and equipment ........................ 452,084
Other assets ...................................... 24,640
Current liabilities .................................. (5,616)
$784,818
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