Update: Sealaska reports $35 million loss
Southeast Alaska’s regional Native corporation had a $35 million net loss in 2013.
Three-quarters of that came from its construction subsidiary, which badly underestimated two federal projects in Hawaii. The corporation’s recently-released annual report says that company’s managers are gone and bidding on similar projects has stopped.
Other losses came from land entitlement costs, including lobbying for federal legislation transferring Tongass timberlands to the corporation.
CEO Chris McNeil says despite the losses, Sealaska remains healthy.
“Sealaska is a stable institution that continues to protect its Native land, support education and shareholder opportunities, while growing our investments and operations,” he says.
McNeil says the corporation is following a list of priorities developed about a year and a half ago.
“One was to narrow the scope of our operations from companies that don’t fit our strategic plan anymore. And we sold the Nypro Kanaak operations, (a plastics manufacturing partnership) notwithstanding the fact that they were all profitable at the time we sold them,” he says.
Overall, Sealaska’s annual financial report lists $165 million in revenues, more than $40 million less than the previous year.
The corporation is headquartered in Juneau and has about 21,500 Tlingit, Haida and Tsimshian shareholders. More than half live outside Southeast.
Shareholder and longtime critic Brad Fluetsch says Sealaska’s losses are a sign of poor management. And the financial adviser says shareholders should have been informed earlier.
“This is just a condemnation of management and their accounting practices and their transparency. To me, it’s evidence of manipulation of shareholders,” he says.
The annual report shows a total loss of more than $50 million. Investments, profitable ventures and resource earnings from other Native corporations shrunk that to $35 million.
CEO McNeil says the board and managers are looking for new areas of growth.
“We need to be able to acquire another company in order to provide both income and the opportunity for sustainable development and potential for employment or empowering and capacity-building for our tribal-member shareholders,” he says.
Fluetsch doesn’t like that idea. He’s pushed for smaller, regional business development, such as growing and selling berries or flowers.
“When you read the annual report, their whole thing is about going out and buying another company, which scares the living daylights out of me. Shareholders cannot afford any more major write-offs. We actually have to start making money,” he says.
Sealaska’s annual report comes out at a time of corporate transition.
McNeil is retiring and a new CEO should be in place this summer.
Longtime Board President Albert Kookesh is stepping down, though he’ll continue as a director. And board member Byron Mallott is leaving to concentrate on his run for governor.
In addition, 10 shareholders are challenging three incumbent board members in the corporation’s annual election.
Randy Wanamaker, spokesman for a slate of four business-oriented candidates, says shareholders deserve a full explanation of the losses.
“The specter of huge losses motivated the independent candidates to enter the campaign to replace long-serving board members. As it turns out, the losses are much greater than we feared,” he says.