The following article is the second installment of a four-part series that discusses the Alaska Native Claims Settlement Act (ANCSA), BSNC’s land base and how the corporation is managing its lands and resources. The first part briefly outlined the history of ANCSA and delved into the history of BSNC’s land selections (from 1968-1977). This second installment will review the early years of BSNC and the difficulties faced by the corporation as the Board and shareholders came to terms with the corporate structure imposed by ANCSA and land ownership (1977-1995). The third article will outline BSNC’s recent history (1995-2013), as land conveyances became finalized and the corporation diversified its business ventures. As a concluding article, the fourth installment will discuss BSNC’s land holdings, the history of exploration and development on these lands, and the plans for future land management and economic development.
In fiscal year 2013, BSNC’s total operating revenues totaled more than $242 million. We have come a long way from where we started, and even further from where we hit rock bottom in March of 1986, when BSNC filed for Chapter 11 bankruptcy protection.
During the 1980s, some Alaska Native corporations faced huge losses in their original settlement fund. Why did so many Alaska Native Corporations face financial hardships? Immediately after the passage of ANCSA, Alaska’s regional corporations were required to establish a corporate board, invest seed capital from the ANCSA settlement and begin an intense process of land selections and eventual land and resource management. The experience and skill sets of many of the new corporate leaders did not easily translate into a corporate setting. BSNC made errors, and in some cases was the recipient of unscrupulous or inadequate investment and business advice. Companies were purchased and investments made with the long-term goal of developing a business portfolio that would enhance the original ANCSA settlement. These often proved to be companies that looked promising, but had little value as long-range growth strategies. As the late Charlie Johnson once said, “We bought a tire company with no tires and a construction company with no equipment.”
The end result was failed investments. Because ANCSA had not been amended to protect ANCSA lands from creditors and the lands could be seized to compensate creditors, BSNC embarked on a valuation of its mineral estate. What ensued was a series of complex agreements designed to protect BSNC’s land base, repay the village corporations for the lost settlement funds, and bring BSNC back from bankruptcy.
The lands subject to the valuation varied greatly in terms of mineral values (whether lode or placer deposits), mineral type, and whether they contained other potential such as material sources or quarry locations. The value of the mineral estate underlying each community would depend on the mineral potential the lands contained. Stronger today: Where skill set and experience failed BSNC in its early years, strong cultural values helped BSNC recover. The value of honor shone through the hard times, and BSNC compensated the villages for the capital lost in the early years by deeding some of its subsurface estate to them, with an understanding that the lands could be purchased back once BSNC emerged from bankruptcy and had sufficient capital. In the 1980’s, tax law allowed companies to sell their losses to large corporations that could count the losses against a portion of their tax liabilities. BSNC was able to utilize its NOLs (Net Operating Losses), and negotiated a payment that brought the company back into solvency. The NOL settlement allowed BSNC to purchase back a majority, but not all, of its subsurface estate.
Some villages retained a portion of subsurface estate, including Brevig Mission, Golovin, King Island, Koyuk, Mary’s Igloo, Shishmaref, Shaktoolik, St. Michael, Stebbins, Teller, Unalakleet, Wales and White Mountain. Some villages retained subsurface lands that held valuable minerals, while others retained the lands that lie under around their cultural village sites. In areas where gravel resources existed, some villages retained those lands with an eye to future community needs and infrastructure projects. Mary’s Igloo Native Corporation retained the subsurface estate surrounding Pilgrim Hot Springs, an area of known geothermal potential.
Bankruptcy tested the core of the company… But BSNC emerged intact and stronger because company leadership relied on strong cultural values honed by their ancestors, who survived for thousands of years in Alaska’s harsh environment…
After the final payments to the village corporations in 1995, BSNC was a small and spare operation centered in Nome. Bankruptcy tested the core of the company… But BSNC emerged intact and stronger because company leadership relied on strong cultural values honed by their ancestors, who survived for thousands of years in Alaska’s harsh environment. Today, these same values continue to define our company, and as each year passes, these values shine stronger in reflection of the work BSNC provides. BSNC’s recovery from bankruptcy has been based on the foundation of teamwork and the expectation that the company will operate with integrity, honor and the ability to respond to change and challenges.
Today, BSNC enjoys a sterling reputation among the business sectors that it interacts with because of these same values.
Bright Arctic Future
The past several years have been very progressive for the company, as strategic financial changes have been implemented to fortify our path to long-term economic sustainability. In 2013, BSNC distributed a record high dividend, which was a 20 percent increase from BSNC’s 2012 distribution.
Today, our company culture is unstoppable in its determination to fulfill its mission. BSNC is growing its value by investing in the communities in which we work and live and by holding true to its commitment to providing meaningful benefits to its shareholders. We are looking forward to a Bright Arctic Future.