Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

v3.20.2
Related Party Transactions
3 Months Ended
Sep. 30, 2020
Related Party Transactions [Abstract]  
Related Party Transactions

13.

RELATED PARTY TRANSACTIONS

Related parties are entities that the Company controls or has the ability to significantly influence. Related parties also include persons who are affiliated with related entities or the Company who are in a position to influence corporate decisions (such as owners, executives, board members and their families).  In the normal course of business, we enter into transactions with our related parties. Below is a list of related parties with whom we have had significant transactions during the comparable periods:

 

1)

Stack’s Bowers Numismatics LLC. ("Stack's Bowers Galleries"). Stack's Bowers Galleries is a wholly owned subsidiary of Spectrum Group International, Inc. ("SGI").  In March 2014, SGI distributed all of the shares of common stock of A-Mark to its stockholders, effecting a spinoff of A-Mark from SGI. As a result of this distribution the Company became a publicly traded company independent from SGI. Also, SGI and the Company have a common chief executive officer.

 

2)

SilverTowne, L.P. SilverTowne L.P. is a non-controlling owner of AMST (i.e., the Company's minting operations).

 

3)

Equity method investees. The Company has three investments in privately held entities, each of which is a precious metals retailer and customer of the Company. Depending on the entity, the Company may have one or more of the following in place: (i) an exclusive supplier agreement, subject to certain limitations; (ii) a product fulfillment services and storage agreement; and (iii) the right to appoint a director to the entity's board of directors.

Our related party transactions include (i) sales and purchases of precious metals (ii) financing activities (iii) repurchase arrangements, and (iv) hedging transactions.

Below is a summary of our related party transactions. Reported transactions from the comparable prior period have been updated, as needed, to include the balances and activity according to our current list of related parties.

Balances with Related Parties

Receivables and Payables, Net

As of September 30, 2020 and June 30, 2020, the Company had related party receivables and payables balances as set forth below:

 

in thousands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2020

 

 

 

June 30, 2020

 

 

 

Receivables

 

 

 

Payables

 

 

 

Receivables

 

 

 

Payables

 

Stack's Bowers Galleries

 

$

4,429

 

(1)

 

$

 

 

 

$

7,981

 

 

 

$

 

Equity method investees

 

 

2,306

 

(2)

 

 

1,078

 

(3)

 

 

1,828

 

 

 

 

3,421

 

SilverTowne

 

 

425

 

(2)

 

 

 

 

 

 

77

 

 

 

 

 

 

 

$

7,160

 

 

 

$

1,078

 

 

 

$

9,886

 

 

 

$

3,421

 

 

(1)

Balance principally includes two secured lines of credit with a balance of $3.4 million and $0.8 million (shown as a component of secured loans receivable); offset by $0.3 million of receivables, net (shown as components of receivables and derivative assets)).  See "Secured Lines of Credit", below.

(2)

Balance primarily represents receivables, net (shown as components of receivables and derivative assets).

(3)

Balance primarily represents payables, net (shown as components of accounts payable and other current liabilities, and derivative liabilities).

Long-term Investments

As of September 30, 2020 and June 30, 2020, the aggregate carrying balance of the equity method investments was $20.9 million and $16.8 million, respectively (see Note 9).

Secured Lines of Credit

On September 19, 2017, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit, bearing interest at a competitive rate per annum, with a maximum borrowing line (subject to temporary increases) of $5.3 million. The loan is secured by precious metals and numismatic products. As of September 30, 2020 and June 30, 2020, the outstanding principal balance of this loan was $0.8 million and $0.7 million, respectively.

On March 1, 2018, CFC entered into a loan agreement with Stack's Bowers Galleries providing a secured line of credit on the wholesale value (i.e., the excess over the spot value of the metal), of numismatic products bearing interest at a competitive rate per annum, with a maximum borrowing line (subject to temporary increases) of $10.0 million. In addition to the annual rate of interest, the Company is entitled to receive a participation interest equal to 10% of the net profits realized by Stack's Bowers Galleries on the ultimate sale of the products. As of September 30, 2020 and June 30, 2020, the outstanding principal balance of this loan was $3.4 million and $8.0 million, respectively.

Activity with Related Parties

Sales and Purchases

During the three months ended September 30, 2020 and 2019, the Company made sales and purchases to various companies, which have been deemed to be related parties, as follows:

 

in thousands

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30, 2020

 

 

September 30, 2019

 

 

 

Sales

 

 

Purchases

 

 

Sales

 

 

Purchases

 

Stack's Bowers Galleries

 

$

21,954

 

 

$

22,013

 

 

$

11,001

 

 

$

16,759

 

Equity method investees

 

 

480,500

 

 

 

2,546

 

 

 

101,023

 

 

 

14,839

 

SilverTowne L.P.

 

 

4,117

 

 

 

4,769

 

 

 

1,527

 

 

 

581

 

 

 

$

506,571

 

 

$

29,328

 

 

$

113,551

 

 

$

32,179

 

 

Interest Income

During the three months ended September 30, 2020 and 2019, the Company earned interest income related to loans made to Stack's Bowers Galleries and to financing arrangements (including repurchase agreements) with affiliated companies, as set forth below:

 

in thousands

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

 

 

September 30,

2020

 

 

 

September 30,

2019

 

Interest income from secured loans receivables

 

$

70

 

 

 

$

298

 

Interest income from finance products and repurchase arrangements

 

 

1,867

 

 

 

 

1,627

 

 

 

$

1,937

 

 

 

$

1,925

 

Other Income

During the three months ended September 30, 2020 and 2019, the Company recorded its proportional share of its equity method investee's net income as other income which totaled $4.1 million and $11,000, respectively.

During the three months ended September 30, 2020 and 2019, the Company earned royalty income related to one of CFC's secured lending agreements with Stack's Bowers Galleries which totaled $359,000 and $42,000, respectively.