PBF Energy 2012 Annual Report Download - page 39

• these covenants also require us to meet or maintain certain financial tests, which may affect our
flexibility in planning for, and reacting to, changes in our industry, such as being able to take advantage
of acquisition opportunities when they arise;
• our ability to obtain additional financing for working capital, capital expenditures, acquisitions, general
corporate and other purposes may be limited; and
• we may be at a competitive disadvantage to those of our competitors that are less leveraged; and we
may be more vulnerable to adverse economic and industry conditions.
Our substantial indebtedness increases the risk that we may default on our debt obligations, certain of which
contain cross-default and/or cross-acceleration provisions. We have significant principal payments due under our
debt instruments. Our subsidiaries’ ability to meet their principal obligations will be dependent upon our future
performance, which in turn will be subject to general economic conditions, industry cycles and financial,
business and other factors affecting our operations, many of which are beyond our control. Our business may not
continue to generate sufficient cash flow from operations to repay our substantial indebtedness. If we are unable
to generate sufficient cash flow from operations, we may be required to sell assets, to refinance all or a portion of
our indebtedness or to obtain additional financing. Refinancing may not be possible and additional financing may
not be available on commercially acceptable terms, or at all.
Despite our level of indebtedness, we and our subsidiaries may be able to incur substantially more debt, which
could exacerbate the risks described above.
We and our subsidiaries may be able to incur substantial additional indebtedness in the future including
additional secured debt. Although our debt instruments and financing arrangements contain restrictions on the
incurrence of additional indebtedness, these restrictions are subject to a number of qualifications and exceptions,
and the indebtedness incurred in compliance with these restrictions could be substantial. To the extent new debt
is added to our currently anticipated debt levels, the substantial leverage risks described above would increase.
Also, these restrictions do not prevent us from incurring obligations that do not constitute indebtedness.
Restrictive covenants in our debt instruments may limit our ability to undertake certain types of transactions.
Various covenants in our debt instruments and other financing arrangements may restrict our and our
subsidiaries’ financial flexibility in a number of ways. Our indebtedness subjects us to significant financial and
other restrictive covenants, including restrictions on our ability to incur additional indebtedness, place liens upon
assets, pay dividends or make certain other restricted payments and investments, consummate certain asset sales
or asset swaps, conduct businesses other than our current businesses, or sell, assign, transfer, lease, convey or
otherwise dispose of all or substantially all of our assets. Some of these debt instruments also require our
subsidiaries to satisfy or maintain certain financial condition tests in certain circumstances. Our subsidiaries’
ability to meet these financial condition tests can be affected by events beyond our control and they may not meet
such tests.
Provisions in our indenture could discourage an acquisition of us by a third party.
Certain provisions of our indenture could make it more difficult or more expensive for a third party to
acquire us. Upon the occurrence of certain transactions constituting a “change in control” as defined in the
indenture, holders of our notes could require us to repurchase all outstanding notes at 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the date of repurchase.
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