A-Mark Precious Metals, Inc. Quarterly report pursuant to Section 13 or 15(d)

Quarterly report pursuant to Section 13 or 15(d)

Related Party Transactions

Related Party Transactions

9 Months Ended

Mar. 31, 2019

RELATED PARTY TRANSACTIONS

Former Parent and its Subsidiaries

In addition to transactions with other affiliates as indicated below, the Company engages with Stack’s Bowers Numismatics LLC ("Stack's Bowers Galleries"), a wholly owned subsidiary of the Former Parent, in (i) sales and purchase transactions, and (ii) transactions in which the Company assists Stack’s Bowers Galleries in financing the purchase of rare coins and precious metals products, both through precious metal repurchase arrangements in which the Company receives a fee based upon the commodity value of the coins, and through loans to Stack’s Bowers Galleries from CFC secured by the coins or precious metal. The effect of these transactions is included in the following tables.

Balances with Affiliated Companies or Persons

As of March 31, 2019 and June 30, 2018, the Company had related party receivables and payables balances as set forth below:



in thousands
	March 31, 2019					June 30, 2018
	Receivables			Payables		Receivables		Payables
Former Parent/Stack's Bowers Galleries	$	9,430	⁽¹⁾	$	—	$	13,240	$	—
Equity method investees	2,774		⁽²⁾	—		900		920
SilverTowne	185		⁽³⁾	—		—		242
Goldline Lenders⁽⁴⁾	—			—		—		7,710
	$	12,389		$	0	14,140		$	8,872

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(1) Balance principally includes two secured lines of credit with a balance of $4.5 million and $4.0 million (shown as a component of secured loans receivables) and trade receivables of $1.0 million. See "Secured Lines of Credit with Stack's Bowers Galleries", below.
(2) Balance primarily represents trade receivables, net (shown as a component of receivables).
(3) Balance primarily represents trade receivables, net (shown as a component of receivables).
(4) Principal balance of the Goldline Credit Facility of $7.5 million was repaid in full on December 7, 2018 before the August 2020 maturity date. The principal payment included a 2% premium of $150,000. (See Note 14 for further details.)

Secured Lines of Credit with Stack's Bowers Galleries

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 March 31, 2019 and June 30, 2018, the aggregate carrying value of this loan was $4.5 million and $3.0 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 March 31, 2019 and June 30, 2018, the aggregate carrying value of this loan was $4.0 million and $9.5 million, respectively.

Long Term Debt Obligation with Goldline Lenders

On December 7, 2018, the Company repaid the $7.5 million principal amount outstanding under the Goldline Credit Facility to the Goldline Lenders in full. Under the terms of the principal repayment, the applicable credit and related agreements have been terminated and none of the parties thereto has any further rights or obligations thereunder (see Note 14).

Activity with Affiliated Companies or Persons

Sales and Purchases Made to Affiliated Companies

During the three and nine months ended March 31, 2019 and 2018, the Company made sales and purchases to various companies, which have been deemed to be related parties, as follows:



in thousands
	Three Months Ended								Nine Months Ended
	March 31, 2019				March 31, 2018				March 31, 2019				March 31, 2018
	Sales		Purchases		Sales		Purchases		Sales		Purchases		Sales		Purchases
Former Parent/Stack's Bowers Galleries	$	4,417	$	3,924	$	12,189	$	211,120	$	23,505	$	21,883	$	24,686	$	214,661
Equity method investees	135,433		7,543		131,244		5,393		410,617		13,262		372,912		6,859
SilverTowne	2,537		121		5,101		699		11,218		1,498		12,384		7,078
	$	142,387	$	11,588	$	148,534	$	217,212	$	445,340	$	36,643	$	409,982	$	228,598

Interest Income Earned from Affiliated Companies

During the three and nine months ended March 31, 2019 and 2018, 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				Nine Months Ended
	March 31, 2019		March 31, 2018		March 31, 2019		March 31, 2018
Interest income from secured loans receivables	$	277	$	88	$	766	$	141
Interest income from finance products and repurchase arrangements	1,684		1,114		5,116		2,333
	$	1,961	$	1,202	$	5,882	$	2,474

Interest Expense Incurred Related to Notes Payable and Long-Term Debt Obligation

During the three and nine months ended March 31, 2019 and 2018, the Company incurred interest expense (including debt amortization costs) related to the debt payable to SilverTowne and the Goldline Lenders, as set forth below:



in thousands
	Three Months Ended				Nine Months Ended
	March 31, 2019		March 31, 2018		March 31, 2019		March 31, 2018
Interest expense incurred related to notes payable	$	—	$	—	$	—	$	4
Interest expense incurred related to long-term debt obligation	—		226		$	342	$	505
	$	—	$	226	$	342	$	509

Other Income Earned from Equity Method Investee

During the three months ended March 31, 2019 and 2018, the Company recorded its proportional share of its equity method investees' net income as other income that total $374,000 and $99,000, respectively. During the nine months ended March 31, 2019 and 2018, the Company recorded its proportional share of its equity method investee's net income as other income that totalled $933,000 and $278,000, respectively. As of March 31, 2019 and June 30, 2018, the aggregate carrying balance of the equity method investments was $11.6 million and $8.4 million, respectively.

Other Expense Incurred with Goldline Lenders

On December 7, 2018, in connection $7.5 million payment of principal under the Goldline Credit Facility, the Goldline Lenders received a 2% ($150,000) premium (see Note 14).