Sealaska tells shareholders it could lose up to $120 million
"It’s serious," said Ross Soboleff, Sealaska spokesman. "It’s going to take us some time to work out of this."
The exact amount of the loss won’t be known until the completion of an audit around the end of March, he said. The company will write off several businesses this year, instead of over the course of several years.
"We’re going to make a clean sweep this year," said Albert Kookesh, board president. "Our problem right now is cash flow."
As long as the company still owns a plastics company and a limestone mine, they will continue to drain cash, he said.
Sealaska held the first of 11 shareholder meetings the night of Feb. 23 in Centennial Hall in Juneau. The scheduled two-hour meeting, attended by about 200 shareholders, lasted five-and-a-half hours as board members answered shareholder questions.
"We’re trying to be as up front with our shareholders as possible about this," Soboleff said.
"They’ve always got a cover story," said Ike Cropley, a member of the dissident shareholder group, Shareholders for Shareholders. "I expected to see more of an outburst among shareholders. It’s a little too calm for me."
Shareholder Jocelyn Marks said shareholders also need to take responsibility for their votes, noting the board was voted in by shareholders.
Sealaska losses are about one-third of the company’s book value. The company listed assets of $354.6 million in its 1999 annual report, but that doesn’t reflect the roughly 330,000 acres that the regional Native corporation owns. Those lands and the minerals they hold aren’t on the company’s books until they’re developed, Kookesh said.
Sealaska was created as one of 13 regional Native corporations after the Alaska Native Claims Settlement Act was signed in 1971. The corporation has about 16,000 shareholders.
Sealaska’s hemorrhage of red ink comes from operating losses and several investments the company is writing off this year, plus a bad year for the company’s investments on Wall Street, Soboleff said.
The operating losses are estimated at $36.5 million while the company is writing down another $75.5 million. An operating loss reflects money lost while the $75 million figure is the loss of the market value of Sealaska’s assets.
The exact amount of Sealaska’s write-offs depends on the sale of a plastics company and a limestone mine, and how much the company will write off the value of trees it bought around the Southeast village of Hoonah, Soboleff said.
Three disastrous investments led to the big hit the company is taking this year. TriQuest Precision Plastics had an operating loss of $22 million last year and will write off another $23 million. Sealaska blamed a downturn in plastics and the North American Free Trade Agreement.
To improve the financial outlook, Sealaska and two other regional Native corporations teamed up with AT&T Wireless to form Alaska Native Wireless and bid on 422 Federal Communications Commission licenses covering 195 markets. Alaska Native Wireless bought 44 wireless licenses for $2.9 billion in the auction. The new licenses cover 43 markets including Juneau, Fairbanks, New York City and Los Angeles, with a population of 71 million, according to Alaska Native Wireless.
Sealaska also invested $32 million in a $180 million casino with the San Pasqual Indian tribe in California.