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10. Related Party Transactions
The Company depends on Canfor to provide approximately 59% (2011 - 54%) of its fibre supply as well as to provide certain key business and administrative services as described below. As a result of these relationships the Company considers its operations to be dependent on its ongoing relationship with Canfor.
The transactions with Canfor are consistent with the transactions described in the December 31, 2011 audited consolidated financial statements of CPPI and the Partnership and are based on agreed upon amounts between the parties.
Transactions and payables to Canfor include purchases of wood chips, pulp and administrative services. These are summarized below:
3 months ended December 31, 12 months ended December 31,(millions of Canadiandollars) 2012 2011 2012 2011----------------------------------------------------------------------------TransactionsCanfor - purchase of woodchips and other $ 25.7 $ 29.6 $ 104.9 $ 119.0-------------------------------------------------------------------------------------------------------------------------------------------------------- As at As at December 31, December 31,(millions of Canadian dollars) 2012 2011----------------------------------------------------------------------------Balance SheetIncluded in accounts payable and accrued liabilities: Canfor $ 12.9 $ 18.2 Lakeland - 0.9Included in trade and other accounts receivable: Products marketed for Canfor $ 4.4 $ 3.2 Canfor(1) 3.0 ---------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Market rate of interest is charged on all amounts receivable from Canfor.
11. Acquisition of Interest in Canfor Pulp Limited Partnership
As a result of the Exchange described in Note 1, CPPI increased its interest in both the Partnership and the General Partner from 49.8% to 100% and Canfor acquired a 50.2% interest in CPPI.
The transaction was accounted for as a reverse acquisition under IFRS, with Canfor's interest in the Pulp Business being the acquirer for accounting purposes and CPPI the acquiree for accounting purposes. The Pulp Business is continuing to operate under CPPI, the legal parent. The financial statements have been presented, along with the comparative periods, from the accounting perspective that Canfor's interest in the Pulp Business is the continuing entity after the exchange transaction as it has gained control of the Company through a reverse transaction. Prior to March 2, 2012 49.8% of the Pulp Business was held by CPPI and reflected as non-controlling interest. Net income and comprehensive income attributable to CPPI's non-controlling interest in the Pulp business was $4.3 million for the twelve months ended December 31, 2012. Canfor's interest in the Pulp Business was deemed to acquire CPPI on March 2, 2012, and as a result of the transaction non-controlling interest of $230.4 million was eliminated and 35,493,307 shares in the amount of $230.4 million were deemed issued and included in share capital.
