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Summary

  • New fee-based, MLP oil logistics company recently formed by PBF Energy (PBF), $3.1 billion market cap.
  • Projected payout for PBFX is 6% for the year ended June '15, with a 15% overage.
  • Blackstone owns 25% pre-IPO.

Based in Parsippany, NJ, PBF Logistics (NYSE:PBFX) scheduled a $275 million IPO on the NYSE with a market capitalization of $636 million at a price range midpoint of $20 for Friday, May 9, 2014.

The full IPO calendar is available at IPOpremium.

SEC Documents
Manager, Joint managers: Barclays, UBS Investment Bank, Citigroup, Credit Suisse, Deutsche Bank Securities, Morgan Stanley, Wells Fargo Securities

Co-Managers: None

End of lockup (180 days): Wednesday, November 5, 2014

End of 25-day quiet period: Tuesday, June 3, 2014

Summary
PBFX is a fee-based, growth-oriented, traditional Delaware master limited partnership recently formed by PBF Energy (NYSE:PBF) to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.

PBF has a market cap of $3.1 billion.

The projected payout for PBFX is 6% for the year ended June '15, with a 15% overage, which leaves a little room for a dividend increase down the road.

Valuation

Glossary

Pre-IPO grade-score summary

2013 yr

June '15 yr

Cash required for minimum distribution ($mm)

$38.1

$38.1

Cash shortfall

-$4.6

Projected cash overage

$5.7

% over/under

-12.1%

15.0%

Valuation Ratios

Mrkt

Price /

Price /

% offered

Cap (MM)

BkVlue

TanBV

in IPO

PBF Logistics LP

$636

17.2

17.1

43%

Compare with parent

Valuation Ratios

Mrkt

Price /

Price /

Dividend

Cap

BkVlue

TanBV

yield

PBF Logistics LP

$636

17.2

17.1

6.00%

PBF Energy

$3,100

4.7

5.5

3.75%

Conclusion

Positive on PBFX.

To put the conclusions and observations in context, the following is reorganized, edited and summarized from the full S-1 referenced above.

Business

PBFX is a fee-based, growth-oriented, traditional Delaware master limited partnership recently formed by PBF Energy to own or lease, operate, develop and acquire crude oil and refined petroleum products terminals, pipelines, storage facilities and similar logistics assets.

PBFX receives, handles and transfers crude oil from sources located throughout the United States and Canada for PBF Energy in support of its three refineries located in Toledo, Ohio; Delaware City, Delaware; and Paulsboro, New Jersey.

PBFX's initial assets consist of a light crude oil rail unloading terminal at the Delaware City refinery that also services the Paulsboro refinery (which PBFX refers to as the "Delaware City Rail Terminal"), and a crude oil truck unloading terminal at the Toledo refinery (which PBFX refers to as the "Toledo Truck Terminal") that are integral components of the crude oil delivery operations at all three of PBF Energy's refineries.

PBFX generates revenue by charging fees for receiving, handling and transferring crude oil. PBFX does not take ownership of or receive any payments based on the value of the crude oil that PBFX handles and does not engage in the trading of any commodities.

As a result, PBFX has no direct exposure to commodity price fluctuations.

Revenue 100% derived from the parent, PBF Energy

At the closing of this offering, all of PBFX's revenue will be derived from long-term, fee-based commercial agreements with subsidiaries of PBF Energy, which PBFX believes will enhance the stability of its cash flows.

PBFX's commercial agreements with PBF Energy will include minimum quarterly volume commitments, inflation escalators and an initial term of seven years.

PBFX intends to seek opportunities to grow its business by acquiring additional logistics assets from PBF Energy and third parties, and through organic growth, including by potentially constructing new assets and increasing the utilization of its existing assets.

Dividend Policy

It is PBFX's intent to distribute at least the minimum quarterly distribution of $0.300 per unit ($1.20 per unit on an annualized basis) on all of its units to the extent PBFX generates sufficient earnings.

Furthermore, PBFX expects that if it is successful in executing its business strategy, PBFX will grow its business in a steady and sustainable manner and distribute to its unit holders a portion of any increase in its earnings resulting from such growth.

Competition

As a result of its contractual relationship with PBF Energy under its commercial agreements and its direct connection to two of its refineries, PBFX believes that its crude oil unloading terminals will not face significant competition from other crude oil unloading terminals for PBF Energy's crude oil transportation requirements to the refineries PBFX supports with respect to the services provided by its initial assets.

Pre-IPO 5% stockholders

Blackstone 24.8%

First Reserve 24.8%

Thomas D. O'Malley 5.2%

Post-IPO 57% of PBFX will be owned by its parent PBF Energy Inc.

Use of proceeds

PBFX expects to net $253 million from its IPO. Proceeds are allocated as follows:

To distribute $30 million to PBF LLC to reimburse it for certain capital expenditures incurred prior to the closing of this offering with respect to the contributed assets;

To pay debt issuance costs of $2 million related to its new revolving credit facility and term loan facility;

To purchase $215.8 million of U.S. Treasury or other investment grade securities which will be used to fund anticipated capital expenditures; and

To retain $5 million for general partnership purposes.

Disclaimer: This PBFX IPO report is based on a reading and analysis of PBFX's S-1 filing, which can be found here, and a separate, independent analysis by IPOdesktop.com. There are no unattributed direct quotes in this article.

Source: IPO Preview: PBF Logistics