PBF Energy 2015 Annual Report Download - page 55

48
which, in turn, may impact the cash that it has available to distribute to its unit holders (including us). Furthermore,
the partnership agreement does not require PBFX to pay distributions on a quarterly basis or otherwise. The board
of directors of PBF GP may at any time, for any reason, change its cash distribution policy or decide not to make
any distributions (including to us).
Increases in interest rates could adversely impact the price of PBFX's units, PBFX’s ability to issue equity or
incur debt for acquisitions or other purposes and its ability to make cash distributions at its intended levels.
Interest rates on future credit facilities and debt offerings could be higher than current levels, causing
PBFX’s financing costs to increase accordingly. As with other yield-oriented securities, PBFX’s unit price is
impacted by the level of its cash distributions and implied distribution yield. The distribution yield is often used
by investors to compare and rank yield-oriented securities for investment decision-making purposes. Therefore,
changes in interest rates, either positive or negative, may affect the yield requirements of investors who invest in
PBFX, and a rising interest rate environment could have an adverse impact on the price of the units, PBFX’s ability
to issue equity or incur debt for acquisitions or other purposes and its ability to make cash distributions at intended
levels, which could adversely impact the value of our investment in PBFX.
PBF Energy will be required to pay taxes on its share of taxable income from PBF LLC and its other subsidiary
flow-through entities (including PBFX), regardless of the amount of cash distributions PBF Energy receives
from PBF LLC.
The holders of limited liability company interests in PBF LLC, including PBF Energy, generally have to
include for purposes of calculating their U.S. federal, state and local income taxes their share of any taxable income
of PBF LLC, regardless of whether such holders receive cash distributions from PBF LLC. PBF Energy ultimately
may not receive cash distributions from PBF LLC equal to its share of the taxable income of PBF LLC or even
equal to the actual tax due with respect to that income. For example, PBF LLC is required to include in taxable
income PBF LLC's allocable share of PBFX's taxable income and gains (such share to be determined pursuant to
the partnership agreement of PBFX), regardless of the amount of cash distributions received by PBF LLC from
PBFX, and such taxable income and gains will flow-through to PBF Energy to the extent of its allocable share of
the taxable income of PBF LLC. As a result, at certain times, including during the subordination period for the
subordinated units, the amount of cash otherwise ultimately available to PBF Energy on account of its indirect
interest in PBFX may not be sufficient for PBF Energy to pay the amount of taxes it will owe on account of its
indirect interests in PBFX.
If PBFX was to be treated as a corporation, rather than as a partnership, for U.S. federal income tax purposes
or if PBFX was otherwise subject to entity-level taxation, PBFX’s cash available for distribution to its unit
holders, including to us, would be reduced, likely causing a substantial reduction in the value of units, including
the units held by us.
The present U.S. federal income tax treatment of publicly traded partnerships, including PBFX, or an
investment in its common units may be modified by administrative, legislative or judicial interpretation at any
time. For example, from time to time the U.S. Congress considers substantive changes to the existing federal
income tax laws that would affect publicly traded partnerships. Any modification to the U.S. federal income tax
laws and interpretations thereof may or may not be applied retroactively and could make it more difficult or
impossible for PBFX to meet the exception to be treated as a partnership for U.S. federal income tax purposes. We
are unable to predict whether any of these changes, or other proposals, will ultimately be enacted. Any such changes
could negatively impact the value of an investment in PBFX common units.
If PBFX were treated as a corporation for U.S. federal income tax purposes, it would pay U.S. federal income
tax on income at the corporate tax rate, which is currently a maximum of 35%, and would likely be liable for state
income tax at varying rates. Distributions to PBFX unitholders would generally be taxed again as corporate
distributions, and no income, gains, losses, deductions or credits would flow through to PBFX unitholders. Because
taxes would be imposed upon PBFX as a corporation, the cash available for distribution to PBFX unitholders
would be substantially reduced. Therefore, PBFX's treatment as a corporation would result in a material reduction