PBF Energy 2013 Annual Report Download - page 60

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PBF Energy Inc. Public Offerings
On December 12, 2012, PBF Energy completed an initial public offering of 23,567,686 shares of its Class A
common stock at a public offering price of $26.00 per share. The initial public offering subsequently closed on
December 18, 2012. PBF Energy used the net proceeds of the offering to acquire approximately 24.4% of the
membership interests in PBF LLC from certain of its existing members. As a result of the initial public offering
and related reorganization transactions, PBF Energy became the sole managing member of PBF LLC with a
controlling voting interest in PBF LLC and its subsidiaries. Effective with completion of the initial public offering,
PBF Energy consolidates the financial results of PBF LLC and its subsidiaries and records a noncontrolling interest
in its consolidated financial statements representing the economic interests of noncontrolling PBF LLC units
holders. PBF LLC is PBF Energy’s predecessor for accounting purposes. The financial statements and results of
operations for periods prior to the completion of PBF Energy’s initial public offering and the related reorganization
transactions are those of PBF LLC.
Additionally, on June 12, 2013, Blackstone and First Reserve completed a public offering of 15,950,000
shares of our Class A common stock at a price of $27.00 per share, less underwriting discounts and commissions,
in a secondary public offering, which we refer to as the June 2013 Secondary Offering. All of the shares were sold
by funds affiliated with Blackstone and First Reserve and we did not receive any of the proceeds from the sale of
these shares. In connection with this offering, Blackstone and First Reserve exchanged 15,950,000 Series A Units
of PBF LLC for an equivalent number of shares of our Class A common stock. The holders of PBF LLC Series
B Units, which include certain executive officers of PBF Energy, had the right to receive a portion of the proceeds
of the sale of the PBF Energy Class A common stock by Blackstone and First Reserve.
As of December 31, 2013, Blackstone and First Reserve and our executive officers and directors and certain
employees beneficially owned 57,201,674 PBF LLC Series A Units (we refer to all of the holders of the PBF LLC
Series A Units as “the members of PBF LLC other than PBF Energy”) and we owned 39,665,473 PBF LLC Series
C Units, and the members of PBF LLC other than PBF Energy through their holdings of Class B common stock
had 59.1% of the voting power in us, and the holders of our issued and outstanding shares of Class A common
stock had 40.9% of the voting power in us.
Tax Receivable Agreement
In connection with our initial public offering, we entered into a tax receivable agreement pursuant to which
we are required to pay the members of PBF LLC, who exchange their units for PBF Energy Class A common stock
or whose units we purchase, approximately 85% of the cash savings in income taxes that we realize as a result of
the increase in the tax basis of our interest in PBF LLC, including tax benefits attributable to payments made under
the tax receivable agreement. We have recognized, as of December 31, 2013, a liability for the tax receivable
agreement of $287.3 million reflecting our estimate of the undiscounted amounts that we expect to pay under the
agreement due to exchanges in connection with our public offerings. Our estimate of the tax agreement liability
is based on forecasts of future taxable income over the anticipated life of our future business operations, assuming
no material changes in the relevant tax law. Periodically, we may adjust the liability based on an updated estimate
of the amounts that we expect to pay, using assumptions consistent with those used in our concurrent estimate of
the deferred tax asset valuation allowance. For example, we must adjust the estimated tax receivable agreement
liability each time we purchase PBF LLC Series A Units or upon an exchange of PBF LLC Series A Units for our
Class A common stock. These periodic adjustments to the tax receivable liability, if any, are recorded in general
and administrative expense and may result in adjustments to our income tax expense and deferred tax assets and
liabilities.
Renewable Fuels Standard
We have seen an escalation in the cost of renewable fuel credits, known as RINs, required for compliance
with the Renewable Fuels Standard. We incurred approximately $126.4 million in RINs costs during the year
ended December 31, 2013 as compared to $43.7 million and $25.9 million during the years ended December 31,
2012 and 2011, an increase due primarily to higher prices for ethanol-linked RINs and increases in our production