PBF Energy 2012 Annual Report Download - page 40

Risks Related to Our Organizational Structure and Our Class A Common Stock
Our only material asset is our interest in PBF LLC. Accordingly, we depend upon distributions from PBF
LLC and its subsidiaries to pay our taxes, meet our other obligations and/or pay dividends in the future.
We are a holding company and all of our operations are conducted through subsidiaries of PBF Holding. We
have no independent means of generating revenue and no material assets other than our ownership interest in
PBF LLC. Therefore, we depend on the earnings and cash flow of our subsidiaries to meet our obligations,
including our indebtedness, tax liabilities and obligations to make payments under the tax receivable agreement.
If we or PBF LLC do not receive such cash distributions, dividends or other payments from our subsidiaries, we
and PBF LLC may be unable to meet our obligations and/or pay dividends.
We intend to cause PBF LLC to make distributions to its members in an amount sufficient to enable us to
cover all applicable taxes at assumed tax rates, make payments owed by us under the tax receivable agreement,
and to pay other obligations and dividends, if any, declared by us. To the extent we need funds and PBF LLC or
any of its subsidiaries is restricted from making such distributions under applicable law or regulation or under the
terms of our financing or other contractual arrangements, or is otherwise unable to provide such funds, such
restrictions could materially adversely affect our liquidity and financial condition.
Our ABL Revolving Credit Facility, senior secured notes and certain of our other outstanding debt
arrangements include a restricted payment covenant, which restricts the ability of PBF Holding to make
distributions to us, and we anticipate our future debt will contain a similar restriction. In addition, there may be
restrictions on payments by our subsidiaries under applicable laws, including laws that require companies to
maintain minimum amounts of capital and to make payments to stockholders only from profits. For example,
PBF Holding is generally prohibited under Delaware law from making a distribution to a member to the extent
that, at the time of the distribution, after giving effect to the distribution, liabilities of the limited liability
company (with certain exceptions) exceed the fair value of its assets. As a result, we may be unable to obtain that
cash to satisfy our obligations and make payments to our stockholders, if any.
We are a “controlled company” within the meaning of the NYSE rules. As a result, we qualify for, and rely on,
exemptions from certain corporate governance requirements.
Blackstone and First Reserve control a majority of the combined voting power of all classes of our voting
stock. As a result, we are a “controlled company” within the meaning of the NYSE corporate governance
standards. Under the NYSE rules, a company of which more than 50% of the voting power is held by another
company is a “controlled company” and may elect not to comply with certain NYSE corporate governance
requirements, including (1) the requirement that a majority of the board of directors consist of independent
directors, (2) the requirement that we have a corporate governance committee that is composed entirely of
independent directors with a written charter addressing the committee’s purpose and responsibilities, (3) the
requirement that we have a compensation committee that is composed entirely of independent directors with a
written charter addressing the committee’s purpose and responsibilities and (4) the requirement that there be an
annual performance evaluation of the corporate governance and compensation committees. We utilize certain of
these exemptions. Accordingly, our stockholders do not have the same protections afforded to stockholders of
companies that are subject to all of the corporate governance requirements of the NYSE.
The requirements of being a public company may strain our resources and distract our management.
As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934,
as amended, and requirements of the Sarbanes-Oxley Act of 2002. These requirements may place a strain on our
systems and resources. The Exchange Act requires that we file annual, quarterly and current reports with respect
to our business and financial condition. The Sarbanes-Oxley Act requires that we maintain effective disclosure
controls and procedures and internal controls over financial reporting. We are implementing additional
procedures and processes for the purpose of addressing the standards and requirements applicable to public
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