News for the Hospitality Executive
|By Paula Dobbyn, Anchorage Daily News, Alaska
Knight Ridder/Tribune Business News
Apr. 2--Cook Inlet Region Inc. achieved a record $434 million in profit last year, the Anchorage-based regional Native corporation reported Monday.
The whopping number -- a record for Native corporations in Alaska -- eclipses CIRI's 2000 profit of $102 million.
"A milestone," said Carl Marrs, CIRI's chief executive, describing the company's success last year. "It's going to be just impossible to match again for a while."
The corporation saw profits swell after it sold off valuable investments in VoiceStream Wireless Corp. Revenue also skyrocketed, jumping to $857 million, up from $380 million in 2000.
Fueled by the telecom deal, CIRI paid its tribal shareholders two special dividends totaling $65,000 for the typical shareholder with 100 shares.
In addition to the December 2000 and May 2001 payouts, shareholders received their regular quarterly dividends. Over the past 15 months, CIRI has paid over $430 million to shareholders, the company said.
Because of the hefty outflow of cash, CIRI's assets dropped from $1.3 billion in 2000 to $969 million at the end of 2001.
Besides telecom, CIRI has invested heavily in resort hotels. It's building a 350-room hotel and casino at Lake Las Vegas, near the famous glittery Strip. The property is jointly owned by a group of partners, including the Ritz Carlton Co. CIRI already co-owns a 500-room hotel at Lake Las Vegas, operated by Hyatt Regency, and it has invested in another resort near Scottsdale, Ariz., which should be open in January 2003.
Not every CIRI investment has been golden. The company decided to write off Construction Machinery Inc. last year, a heavy equipment lease firm with offices in California. CIRI is liquidating the company and taking a $24 million loss, Marrs said. The venture suffered from bad timing, Marrs said, partly because the Far East financial crisis caused a flood of Asian-made heavy equipment into the United States.
CIRI, one of Alaska's most successful Native corporations, will continue to be a cautious but aggressive investor, Marrs said. It's eyeing two potentially lucrative deals, one in oil and gas, the other in jet leasing, the chief executive said. He was reluctant to offer details until the deals are signed.
On another matter, attorneys for CIRI scored a court victory last week in a dispute over a controversial elders program the corporation launched two years ago. In February 2000, CIRI's board approved giving original shareholders 65 and older a quarterly dividend of $450. Original shareholders are those who enrolled with CIRI after Congress passed the Alaska Native Claims Settlement Act in 1971, as opposed to others who inherited shares from relatives or friends.
A small group of shareholders sued, saying the elder dividend violated corporate rules by creating a separate class of shareholders who received special treatment.
"It's a corporate scheme that robs Peter to pay Paul," said Petersburg attorney Fred Triem, who represented the plaintiffs.
CIRI is taking roughly $1 million a year that belongs to all shareholders and giving it to a group of 500 elders, Triem said.
"I have nothing against older people. I'm 62 myself," he said. But there are other CIRI shareholders, such as single mothers, the unemployed or infirm, who could use the money too. And under corporate law, it's illegal to treat shareholders differently, Triem argued.
A three-judge panel of the 9th U.S. Circuit Court of Appeals disagreed. The "plain language" of ANCSA allows the corporation to offer the elder dividends, the court decided. In addition, legislative history confirms that Congress intended that Native corporations provide the type of benefits provided by CIRI in this case, the judges ruled.
"ANCSA seemed pretty clear on it to us. But anyone can hire a lawyer for $200 and file a lawsuit," Marrs said.
CIRI plans to send checks to elders this week.
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(c) 2002, Anchorage Daily News, Alaska. Distributed by Knight Ridder/Tribune Business News. DT,