By PAT FORGEY Alaska Dispatch
May 15, 2014
JUNEAU — Sealaska Corp. had an operating loss of $35 million last year and a 22 percent drop in revenue, the Native corporation said in an annual report released Thursday.
Sealaska said the largest of its losses was $24 million at subsidiary Sealaska Constructors but said the company had taken steps to limit the losses.
“Sealaska management has taken corrective action and the losses will be contained in 2013,” the report said.
Surprise losses from the subsidiary mean that the even with investment earnings and profits shared by other Native corporations, Sealaska was forced to post the large loss. Sealaska had net revenue from continuing operations of $165 million, it said.
The management of the subsidiary has been “released,” the report said, without providing additional details. It said bidding on new projects has been halted. The problems stemmed from civil construction projects in Hawaii on which the company underestimated construction costs when bidding.
The company provided some written answers to questions from the Alaska Dispatch, but declined to say exactly how big the projects were, although officials maintained they were multimillion dollar contracts.
Sealaska Constructors specializes in 8(a) contracting on federal projects in which the its status as a Native-owned company gives it bidding preference.
The news did not sit well with some of Sealaska’s 21,600 shareholders.
“It literally made me sick to my stomach,” said Carlton Smith, a shareholder and a City and Borough of Juneau assembly member. “The results for 2013 were far worse than I thought they would be.”
Smith is also part of a slate of independent candidates seeking to win seats on the corporation’s board of directors and running against corporation-backed candidates.
Smith said the corporation needs to provide shareholders with more information about its finances, including what happened at Sealaska Constructors.
“This report puts shareholders in a challenging position to try to figure that out,” he said.
The losses at Sealaska Constructors overshadowed other losses, including Sealaska’s long-profitable natural resources segment and $25 million in losses due to accounting changes.
The company’s total revenue of $165 million, with operating losses of $35 million in 2013 contrasts with revenue of $211 million and operating profits of $11 million the previous year.
But the company also showed a decrease in total assets of $66 million during the year, falling to $319 million. The company’s investments amounted to about $180 million at the year’s end, which produced investment profits of almost $17 million this year. But that wasn’t enough to make Sealaska profitable.
This has been a year of transition for Sealaska, as Chris McNeil, the company president and CEO, announced his resignation from the job he’s held since 2001. Further, Board Chairman Albert Kookesh has announced he’ll be stepping down as chairman but will remain on the board.
Kookesh is a former state senator who lost his seat after redistricting, and also recently stepped down as co-chairman of the Alaska Federation of Natives
Longtime board member Byron Mallott has also announced he’ll be leaving the board when his term expires this year to concentrate on his campaign for governor.
Also in the last year Sealaska sold off its plastics manufacturing business, Nypro Kanaak, to focus on other businesses.
Despite the difficult year, company executives emphasized that Sealaska remains strong, with significant assets, including cash.
Contact Pat Forgey at email@example.com