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Related Party Transactions
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6 Months Ended |
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Dec. 31, 2012
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| Related Party Transactions [Abstract] | |
| Related Party Transactions |
Note 11 - Related Party Transactions
U.S. Federal Tax Withholdings. During the third quarter of fiscal year 2012, the Company identified a potential liability of approximately $2.0 million related to the Company's non-payment of required U.S. Federal tax withholdings in the course of its initial acquisition of a part of NP. In October 2009, Magellan acquired 83.5% of the membership interests in NP (the "Poplar Acquisition"), from the two majority owners of NP, White Bear LLC ("White Bear") and YEP I, SICAV-FES ("YEP I"). Both of these entities are affiliated with Nikolay V. Bogachev, a director of Magellan at the time of the Poplar Acquisition who has since resigned, and is a foreign national. Due to the status of YEP I as a foreign entity and the members of White Bear as foreign nationals, Magellan was required to make U.S. Federal tax withholdings from the payments to or for the benefit of White Bear and YEP I. Of the $2.0 million liability, $1.3 million was estimated to relate to the interest sold by White Bear, $0.6 million to the interest sold by YEP I, and $0.1 million to Magellan's interest on the late payment of the U.S. Federal tax withholdings.
With regards to White Bear, Mr. Bogachev has filed his U.S. income tax return and paid taxes due on the Poplar Acquisition and Magellan has no further related potential liability. With regards to YEP I, which is now a defunct entity, Magellan has concluded that it is unlikely that one of YEP I's successor entities will be filing the corresponding U.S. income tax return, and has initiated the disclosure process to the IRS and expects the liability to range between approximately $0.6 million and $0.8 million.
As of December 31, 2012, we have recorded a total liability of $0.7 million under accrued and other liabilities in the consolidated balance sheets related to this matter. That amount is comprised of $0.6 million in withholdings, penalties, and interest related to YEP I and $0.1 million related to Magellan's interest on its late payment of the U.S. Federal tax withholdings. There was no effect on the unaudited condensed consolidated statements of operations for the six months ended December 31, 2012, related to this transaction.
See Note 14 - Subsequent Events below for a discussion of a transaction subsequent to December 31, 2012 in which Mr. Bogachev had an interest.
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