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Related Party Transactions
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9 Months Ended |
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Mar. 31, 2012
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| Related Party Transactions [Abstract] | |
| Related Party Transactions Disclosure Text Block |
Related Party Transactions
The Company leases its Denver office (the office of NP) from an entity owned, in part, by J. Thomas Wilson, President and CEO of the Company. The total lease expense paid under this arrangement for the nine months ended March 31, 2012, and 2011, was $54 thousand and $54 thousand, respectively.
J. Robinson West is the Chairman of the Board of Directors and also Chairman, Founder, and CEO of PFC Energy (“PFC”). PFC has served as a consultant for the Company on various Australian projects. The total consulting fees paid to PFC during the nine months ended March 31, 2012, and 2011, was $97 thousand and $342 thousand, respectively. As of March 31, 2012, and June 30, 2011, Magellan reported accrued consulting fees of $0 and $49 thousand, respectively.
See Note 2 for information related to transactions the Company entered into with NT and ER, effective September 1, 2011.
Young Energy Prize SA (“YEP”), a Luxembourg corporation and the Company’s largest shareholder, was engaged by the Company to help assist in the funding of the Evans Shoal Transaction. Mr. Nikolay Bogachev, a Director of the Company since July 2009, is the President and CEO of YEP as well as an equity owner of YEP.
On August 5, 2010, the Company executed a Securities Purchase Agreement (the “Second Purchase Agreement”), an Investor’s Agreement, and Memorandum of Understanding Agreement with YEP to finalize the terms of its second Private Investment in a Public Equity (“PIPE”). Pursuant to the terms of the Second Purchase Agreement, the Company was required to use the proceeds from the PIPE to close the Evans Shoal Transaction. On February 11, 2011 and February 17, 2011, the Company and YEP executed amendments to the Second Purchase Agreement. On February 17, 2011, the Company and YEP also executed an Investment Agreement to document the terms of additional financing to be provided by YEP to the Company in order to facilitate the closing of the Evans Shoal Transaction.
Since the Asset Sales Agreement was terminated and MPAL received back the additional AUD $10.0 million deposit made in connection with the Evans Shoal Transaction, the transactions contemplated by the Second Purchase Agreement, as amended, and the Investment Agreement, as amended, have not closed. As of October 12, 2011, the Company and YEP terminated these agreements.
The Company’s improved controls and processes over financial reporting have lead to the identification of a potential liability of approximately $2.0 million. The Company failed to make required U.S. Federal Tax Withholdings in October 2009 in relation to the initial acquisition of Poplar. In October 2009, Magellan acquired 83% of the interests in NP from White Bear LLC (“White Bear”), a related party, and YEP I, SICAV-FES (“YEP I”). Magellan was required to make U.S. Federal Tax Withholdings from the payments to or for the benefit of foreign entities in consideration for the acquisition. Mr. Nikolay Bogachev, a Director of Magellan and a foreign national, is the majority owner of White Bear, and YEP I is a Luxembourg entity. The Company has estimated that it was required to withhold approximately $1.0 million from this distribution of proceeds in October 2009 and that the related penalties and interests are estimated to be an additional $1.0 million. As a result, we have recorded a total liability of $2.0 million in the unaudited condensed consolidated balance sheet included in this report. As of May 10, 2012, Magellan has confirmed that White Bear and its Members, which represent approximately 70% of the payees related to this transaction, will file their respective U.S. income tax returns and pay any income tax and related penalties and interests due. As a result, we have recorded a $1.3 million receivable under other assets in the unaudited condensed consolidated balance sheet, corresponding to White Bear’s share of Magellan’s liability. The Company is in the process of addressing its requirements with respect to YEP I and has not recorded a receivable as of March 31, 2012. The effect on the unaudited condensed consolidated statement of operations included in this report is an expense of $550 thousand recorded under general and administrative expenses, which reflects the effects of the YEP withholding and penalties, as well as an interest expense of $190 thousand, which reflects the effects of interest the Company is obligated for.
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