ANCHORAGE -- When Alaska Power & Telephone Co. bought an interest in paving company Summit Alaska Inc. last year, the move was supposed to provide stability through diversification, but the strategy backfired.
When AP&T filed for Chapter 11 bankruptcy reorganization Dec. 18, the Port Townsend, Wash.-based utility company fingered Summit as the dead weight that dragged it down.
Anchorage-based Summit filed for Chapter 7 liquidation in federal Bankruptcy Court last month.
AP&T's main business is providing power and telephone services in rural Alaska. Now AP&T is focused on maintaining these core operations, said president Robert Grimm, and planning to pare away anything else.
"It was terribly disappointing to see one sour investment, Summit, essentially destroy a lot of people's lifelong efforts to build up the company," said Grimm, who has been with the company 30 years.
AP&T bought a 39 percent interest in Summit last year for $1.2 million, according to the utility's 2001 annual report. That year Summit did $42 million in road construction, gravel sales and other contracts, while posting a $448,000 profit. Summit's high-profile projects include work on the current construction at Anchorage's international airport.
But AP&T was more than an investor in Summit. It provided equipment loans and guaranteed $8.4 million in Summit debt, the annual report said. Summit turned out to be extremely undercapitalized, focused more on growth than profitability.
"It kind of fell on us like a log," Grimm said.
