PBF Energy 2013 Annual Report Download - page 128

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PBF ENERGY INC. AND
PBF HOLDING COMPANY LLC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT SHARE, UNIT, PER SHARE, PER UNIT AND BARREL DATA)
F- 32
arrangements is recorded at market price for the J. Aron owned inventory held in the Company's storage tanks
under the Inventory Intermediation Agreements, with any change in the market price being recorded in costs of
sales.
Prior to July 1, 2013, the Company had the obligation to repurchase certain intermediates and lube products under
its Offtake Agreements that were held in the Company’s refinery storage tanks. A liability included in Inventory
supply and Offtake Arrangements was recorded at market price for the volumes held in storage consistent with the
terms of the Offtake Agreements with any change in the market price recorded in costs of sales. The liability
represented the amount the Company expected to pay to repurchase the volumes held in storage. The Company
recorded a non-cash benefit of $20,248 and a non-cash charge of $11,619 related to this liability in the years ended
December 31, 2013 and 2012, respectively.
The Company is subject to obligations to purchase Renewable Identification Numbers ("RINs") required to comply
with the Renewable Fuels Standard. The Company's overall RINs obligation is based on a percentage of domestic
shipments of on-road fuels as established by the Environmental Protection Agency ("EPA"). To the degree the
Company is unable to blend the required amount of biofuels to satisfy our RINs obligation, RINs must be purchased
on the open market to avoid penalties and fines. The Company records its RINs obligation on a net basis in Accrued
expenses when its RINs liability is greater than the amount of RINs earned and purchased in a given period and
in Prepaid expenses and other current assets when the amount of RINs earned and purchased is greater than the
RINs liability.
8. DELAWARE ECONOMIC DEVELOPMENT AUTHORITY LOAN
In June 2010, in connection with the Delaware City acquisition, the Delaware Economic Development Authority
(the “Authority”) granted the Company a $20,000 loan to assist with operating costs and the cost of restarting the
refinery. The loan is represented by a zero interest rate note and the entire unpaid principal amount is payable in
full on March 1, 2017, unless the loan is converted to a grant. The Company recorded the loan as a long-term
liability pending approval from the Authority that it has met the requirements to convert the remaining loan balance
to a grant.
The loan converts to a grant in tranches of up to $4,000 annually over a five-year period, starting at the one-year
anniversary of the “certified restart date” as defined in the agreement and certified by the Authority. In order for
the loan to be converted to a grant, the Company is required to utilize at least 600 man hours of labor in connection
with the reconstruction and restarting of the Delaware City refinery, expend at least $125,000 in qualified capital
expenditures, commence refinery operations, and maintain certain employment levels, all as defined in the
agreement. In February 2013 and October 2013, the Company received confirmation from the Authority that the
Company had satisfied the conditions necessary for the first and second $4,000 tranche of the loan to be converted
to a grant. As a result of the grant conversion, property, plant and equipment, net was reduced by $8,000 as of
December 31, 2013, as the proceeds from the loan were used for capital projects.
9. CREDIT FACILITY AND LONG-TERM DEBT
Revolving Loan
In October 2012, PBF Holding amended and restated its asset based revolving credit agreement (“Revolving Loan”)
to a maximum availability of $1,575,000 and extended the maturity date to October 26, 2017. In addition, the
Applicable Margin, as defined in the agreement, was amended to a range of 0.75% to 1.50% for Alternative Base
Rate Loans and 1.75% to 2.50% for Adjusted LIBOR Rate Loans, and the Commitment Fee, as defined in the
agreement, was amended to a range of 0.375% to 0.50%, all depending on the Company’s debt rating. The Revolving
Loan was further expanded to a maximum availability of $1,610,000 in November 2013.