| Item 1.01. | Entry into a Material Definitive Agreement |
Closing of 6.00% Senior Notes Offering
On January 24, 2020, PBF Holding Company LLC (“PBF Holding”), a subsidiary of PBF Energy Company LLC (“PBF LLC”), in turn a subsidiary of PBF Energy Inc. (“PBF Energy” and collectively with its consolidated subsidiaries including PBF LLC and PBF Holding, the “Company”) entered into an Indenture (the “Indenture”) among PBF Holding and PBF Holding’s wholly-owned subsidiary, PBF Finance Corporation (together with PBF Holding, the “Issuers”), the Guarantors named on the signature pages thereto, Wilmington Trust, National Association, as Trustee and Deutsche Bank Trust Company Americas, as Paying Agent, Registrar, Transfer Agent and Authenticating Agent, under which the Issuers issued $1,000,000,000 in aggregate principal amount of 6.00% Senior Notes due 2028 (the “Notes”). The initial purchasers (the “Initial Purchasers”) in the offering purchased the Notes pursuant to a private placement transaction conducted under Rule 144A and Regulation S of the Securities Act of 1933, as amended. The Issuers received net proceeds of approximately $989.0 million from the offering after deducting the Initial Purchasers’ discount and estimated offering expenses. The Company intends to use net proceeds to fund the previously announced redemption of its outstanding 7.00% Senior Notes due 2023 (the “2023 Notes”) and for general corporate purposes, including to fund a portion of the cash consideration payable by PBF Holding in the pending acquisition of the Martinez refinery and related logistics assets.
The Notes are guaranteed on a senior unsecured basis by PBF Services Company LLC, PBF Investments LLC, Delaware City Refining Company LLC, PBF Power Marketing LLC, Paulsboro Refining Company LLC, Toledo Refining Company LLC, PBF International Inc., Chalmette Refining, L.L.C., PBF Energy Western Region LLC, Torrance Refining Company LLC and Torrance Logistics Company LLC (each, a “Guarantor”). The Notes and guarantees are senior unsecured obligations and rank equal in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness, including PBF Holding’s asset based revolving credit facility (the “Revolving Credit Facility”), the Issuers’ 7.25% Senior Notes due 2025 and the 2023 Notes. The Notes and the guarantees rank senior in right of payment to the Issuers’ and the Guarantors’ existing and future indebtedness that is expressly subordinated in right of payment thereto. The Notes and the guarantees are effectively subordinated to any of the Issuers’ and the Guarantors’ existing or future secured indebtedness (including the Revolving Credit Facility) to the extent of the value of the collateral securing such indebtedness. The Notes and the guarantees are structurally subordinated to any existing or future indebtedness and other obligations of the Issuers’
non-guarantor
subsidiaries.
The Notes pay interest semi-annually in cash in arrears on February 15 and August 15 each year, beginning on August 15, 2020. The Notes will mature on February 15, 2028.
The Indenture contains customary terms, events of default and covenants for an issuer of
non-investment
grade debt securities. These covenants include limitations on the Issuers’ and its restricted subsidiaries’ ability to, among other things, incur additional indebtedness or issue certain preferred stock; make equity distributions, pay dividends on or repurchase capital stock or make other restricted payments; enter into transactions with affiliates; create liens; engage in mergers and consolidations or otherwise sell all or substantially all of the Issuers’ assets; designate subsidiaries as unrestricted subsidiaries; make certain investments; and limit the ability of restricted subsidiaries to make payments to PBF Holding. These covenants are subject to a number of important exceptions and qualifications. Many of these covenants will cease to apply or will be modified if the Notes are rated investment grade.
At any time prior to February 15, 2023, the Issuers may on any one or more occasions redeem up to 35% of the aggregate principal amount of the Notes in an amount not greater than the net cash proceeds of certain equity offerings at a redemption price equal to 106.000% of the principal amount of the Notes, plus any accrued and unpaid interest to the date of redemption. On or after February 15, 2023, the Issuers may redeem all or part of the Notes, in each case at the redemption prices described in the Indenture, together with any accrued and unpaid interest to the date of redemption. In addition, prior to February 15, 2023, the Issuers may redeem all or part of the Notes at a “make-whole” redemption price described in the Indenture, together with any accrued and unpaid interest to the date of redemption.
Upon a change of control that results in a ratings decline, the Issuers will be required to make an offer to purchase the Notes at a purchase price of 101% of the principal amount of the Notes on the date of purchase plus accrued interest. Prior to a covenant termination event, certain asset dispositions will be triggering events that may require the Issuers to use the proceeds therefrom to offer to repurchase Notes at a purchase price equal to 100% of the principal amount of the Notes repurchased, plus accrued and unpaid interest to the applicable repurchase date.
