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Related Party Transactions
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9 Months Ended |
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Mar. 31, 2013
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| Related Party Transactions [Abstract] | |
| Related Party Transactions |
Note 12 - Related Party Transactions
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 foreign national who was a director of Magellan at the time of the Poplar Acquisition but has since resigned. Because YEP I was a foreign entity and the members of White Bear were 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 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 concluded that it was unlikely that one of YEP I's successor entities would be filing the corresponding U.S. income tax return. As a result, the Company initiated a disclosure process with the IRS.
As a result of this disclosure process, and subsequent to March 31, 2013, the Company's total liability with respect to this matter was determined to be approximately $0.1 million. As of March 31, 2013, we have recorded a total liability of $0.1 million under accrued and other liabilities in the unaudited condensed consolidated balance sheet related to this matter. The effect of this transaction on the unaudited condensed consolidated statements of operations for the nine months ended March 31, 2013, was other income of $0.4 million representing the difference between the original estimate and the approximate final liability of $0.1 million.
See Note 8 - Stockholders' Equity above for discussions of transactions in which Mr. Bogachev had an interest.
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