PBF Energy issues $550 million in 0% exchangeable senior notes due 2032
PBF Energy Inc. has issued $550 million in 0% exchangeable senior notes due in 2032, along with PBF Holding Company LLC. The notes were issued under a private placement agreement with PBF Finance Corporation, as per a Securities and Exchange Commission filing. A significant portion of the offering, $50 million, was from the initial purchasers' option.
PBF Energy received approximately $533.6 million in net proceeds after accounting for discounts and expenses. The company plans to use the funds for capped call transactions, to repay existing 7.875% senior unsecured notes due in 2030, and for general corporate purposes. The firm's stock has shown impressive gains, with a 155% return over the past year, trading at $76.75, up from previous levels.
The market capitalization stands at $9.21 billion, with a debt-to-equity ratio of 0.39, indicating potential undervaluation according to InvestingPro analysis. The notes are senior unsecured obligations guaranteed by PBF subsidiaries, ranking equally in payment rights with the issuers' and guarantors' existing and future senior debt.
They are subordinated to liabilities of non-guarantor subsidiaries. The notes do not pay regular interest and mature on January 15, 2032, unless exchanged, repurchased, or redeemed earlier. Holders can exchange their notes at a rate of 10.3306 shares per $1,000 principal amount, or approximately $96.80 per share, if PBF's common stock reaches or exceeds 150% of the exchange price for a set period.
The exchange rate can be adjusted under certain conditions. PBF has the option to redeem the notes starting January 20, 2030, if the common stock trades at or above 130% of the exchange price for at least 20 trading days within a 30-day period. The company can also force a repurchase of the notes at 100% principal plus accrued special interest if certain fundamental changes occur.
As part of the notes' terms, PBF entered into capped call transactions with a cap price of $123.20 per share, roughly 75% above the September 14, 2026, sale price of $70.40. This arrangement aims to limit potential dilution upon note exchange. According to InvestingPro Tips, the company currently manages moderate debt levels, one of 14 exclusive insights available to subscribers.
For further analysis, investors can consult PBF’s Pro Research Report, which is part of the coverage on over 1,400 US equities.
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