PBF Energy 2013 Annual Report Download - page 49

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Facility and the Senior Secured Notes), we intend to fund any future dividends out of our cash flow from operations
and, as a result, we do not expect to incur any indebtedness or to use the proceeds from equity offerings to fund
such payments.
PBF Energy is a holding company and has no material assets other than its ownership interests of PBF LLC.
In order for PBF Energy to pay any dividends, they will need to cause PBF LLC to make distributions to it and
the holders of PBF LLC Series A Units, and PBF LLC will need to cause PBF Holding to make distributions to it,
in an amount sufficient to cover cash dividends, if any, declared by PBF Energy. 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, PBF LLC may be unable to obtain cash from PBF Holding to satisfy its obligations
and make distributions to PBF Energy for dividends, if any, to PBF Energy's stockholders. If PBF LLC makes
such distributions to PBF Energy, the holders of PBF LLC Series A Units will also be entitled to receive pro rata
distributions.
The ability of PBF Holding to pay dividends and make distributions to PBF LLC is, and in the future may
be, limited by covenants in its ABL Revolving Credit Facility, the Senior Secured Notes and other debt instruments.
Subject to certain exceptions, the ABL Revolving Credit Facility and the indenture governing the Senior Secured
Notes prohibit PBF Holding from making distributions to PBF LLC if certain defaults exist. In addition, both the
indenture and the ABL Revolving Credit Facility contain additional restrictions limiting PBF Holding’s ability to
make distributions to PBF LLC. Subject to certain exceptions, the restricted payment covenant under the indenture
restricts PBF Holding from making cash distributions unless its fixed charge coverage ratio, as defined in the
indenture, is at least 2.0 to 1.0 after giving pro forma effect to such distributions and such cash distributions do
not exceed an amount equal to the aggregate net equity proceeds received by it (either as a result of certain capital
contributions or from the sale of certain equity or debt securities) plus 50% of its consolidated net income (or less
100% of consolidated net loss) which is defined to exclude certain non-cash charges, such as impairment charges,
plus certain other items. Two important exceptions to the foregoing are (i) a permission to pay up to the greater of
$100.0 million and 1% of PBF Holding’s total assets and (ii) a permission to pay an additional $200.0 million
subject to compliance with a total debt ratio of 2.0 to 1.0. The ABL Revolving Credit Facility generally restricts
PBF Holding’s ability to make cash distributions if (x) the aggregate amount of such distributions exceeds the then
existing available amount basket (as defined by the ABL Revolving Credit Facility) and (y) before and after giving
effect to any such distribution (a) it fails to have pro forma excess availability under the facility greater than an
amount equal to 17.5% of the lesser of (1) the then existing borrowing base and (2) the then current aggregate
revolving commitment amount, which as of December 31, 2013 was $1.610 billion or (b) it fails to maintain on a
pro forma basis a fixed charge coverage ratio, as defined by the ABL Revolving Credit Facility, of at least 1.1 to
1.0. As a result, we cannot assure you that PBF Holding will be able to make distributions to PBF LLC in order
for PBF LLC to make distributions to PBF Energy. If that is the case, it is unlikely that PBF Energy will be able
to declare dividends as contemplated herein.
Based upon our operating results for the year ended December 31, 2013, PBF Holding was permitted under
its ABL Revolving Credit Facility and indenture to pay distributions to PBF LLC so that PBF LLC could make
distributions to its members, including us, in amounts sufficient to enable us to pay a quarterly dividend at the rate
specified above. The ability of PBF Holding to comply with the foregoing limitations and restrictions is, to a
significant degree, subject to its operating results, which is dependent on a number of factors outside of our control.
As a result, we cannot assure you that we will be able to declare dividends as contemplated herein. See “Item 1A.
Risk Factors - Risks Related to Our Organizational Structure and Class A Common Stock - We cannot assure you
that we will continue to declare dividends or have the available cash to make dividend payments.”
PBF LLC made pre-IPO cash distributions to its members in the amount of $161.0 million during 2012.
PBF Holding paid $215.8 million in distributions to PBF LLC during the year ended December 31, 2013. PBF
LLC used $116.0 million of this amount in total to make four separate non-tax distributions of $0.30 per unit ($1.20
per unit in total) to its members, of which $37.9 million was distributed to PBF Energy and the balance was