Web posted Friday, March 4, 2011

Calista Corp. aims to cut dependence on 8(a)s, add jobs

By Tim Bradner
Alaska Journal of Commerce


  Calista Corp. President and CEO Andrew Guy stands in his office in Anchorage. New to the president position, Guy says his main goal is to bring jobs to his region and its shareholders. Photo/Michael Dinneen/For the Journal    

Things are going well for Calista Corp., the Alaska Native regional corporation for the Yukon-Kuskokwim region of Southwest Alaska. Revenues are up significantly and profits are steady.

There are challenges out there – the need to diversify among them – but for now all the indicators are up, says Calista President and CEO Andrew Guy.

Calista has had its bumps in the past, like many other Alaska Native corporations, when a series of business investments in the 1970s and 1980s did not perform as expected. That's in the past now, and Calista appears to be on a steady growth track.

Guy was named president of Calista in October, replacing Matthew Nicholai. Guy was previously Calista's executive vice president and general counsel, and he brings a mixture of personal experience and professional preparation to the job.

He is representative of a new generation of young, educated Alaska Natives who have professional training and are moving into the senior management positions in the Alaska Native corporations.

Guy is a Calista shareholder, born in a small village in the region. He attended high school in Bethel, the regional hub community, received his bachelor's degree from the University of Alaska Fairbanks in 1985 and a law degree from the University of Colorado School of Law in 1995. He is a member of the Alaska Bar Association.

Calista's numbers tell a good story. Revenues in 2010 were at about $234 million, Guy said. That's up from 2009 revenues of $203 million. The total for 2010 will be confirmed when audits are completed later this spring, he said.

Net after-tax profits will be similar to 2009, although final numbers cannot be announced until the audit is finalized. Calista paid a dividend of $2.25 per share in 2009 and its board will likely declare a dividend this spring for 2010.

Calista was able to navigate the national recession of 2009 without substantial adverse effects, although there were challenges.

Calista region

The corporation represents a large area of Southwest Alaska, about 10 percent of the total state land area, including the middle and lower Kuskokwim River, the lower Yukon River, large river delta areas and a big section of coast between the two river systems.

Calista has 65 villages and 13,000 original shareholders.

The corporation owns 6.5 million acres in the region that were selected under terms of the 1971 Alaska Native Claims Settlement Act.

Calista's region is not the largest in total area – Doyon Ltd., in Interior Alaska, holds that distinction – but it has the largest Alaska Native resident population of any region. Communities in the region are populated mostly by Yup'ik people with some Cup'ik and Athabaskans. In many families, Yup'ik is still the first language learned and spoken by children. The culture is still dependent on a subsistence lifestyle.

The Calista region is also one of the most economically depressed parts of Alaska. Subsistence is the primary food source and helps sustain people, but cash is still needed for heating oil, basic utilities and other equipment needed for rural living.

Calista Corp.

CEO: Andrew Guy

Headquarters: 301 Calista Court, Anchorage, AK 99518

(907) 279-5516

Website: www.calistacorp.com

Shareholders: 13,300

Land rights: 5 million acres

Assets

2008: $144.8 million

2009: $145.6 million

Revenue

2008: $224.1 million

2009: $203 million

Net income

2008: $26.6 million

2009: $18.1 million

Dividends paid

2008: $2.4 million

2009: $2.8 million

Fiscal year begins Jan. 1

Basic living costs are much higher than in Alaska's urban communities, however. Jobs are scarce, and Guy is keenly aware of the need. One of his goals as president is to increase Calista's activity to create jobs in the region.

There is a plan to do that, too. The Donlin Creek gold project, inland from Crooked Creek village on the Kuskokwim River, is on land where Calista owns the mineral rights. The surface lands are owned by The Kuskokwim Corp., which is owned by 10 villages in the immediate area.

If Donlin Creek's developers, a joint venture of Barrick Gold, a major mining company, and NovaGold Resources, a minerals exploration company, proceed with construction, the mine will be one of the world's largest gold producers.

Donlin Creek could provide the kind of job-creating stimulus to the Y-K region that the Red Dog Mine, where NANA Regional Corp. is the landowner, has provided to Northwest Alaska communities.

Business plan

Aside from mining, the opportunities for investing in the region are few, and until Donlin Creek gets on line, Calista must focus its business investments in other parts of Alaska and in the Lower 48.

Calista's businesses are diverse, and include construction, oil and gas drilling, telecommunications, publishing, commercial printing and advertising, as well as holdings in several real estate title companies.

And, as with other Native corporations, Calista has a number of companies that specialize in federal facility contracting under the U.S. Small Business Administration's 8(a) minority business programs.

Calista has done well with its 8(a) contracting. In fact, 80 percent of the corporation's revenues in 2009 and 2010 were through its 8(a) companies. One of the corporation's goals is to reduce that percentage.

"I'd like to get the number down, but federal contracting will continue to be important in our business," Guy said.

Two new acquisitions by Calista in 2010 — the purchase of Brice Inc., a construction company, and Yukon Equipment Inc., a dealer in construction equipment — will have the effect of reducing the 8(a) dependence to about 60 percent of our revenues, Guy said.

The purchase of Brice and Yukon Equipment were also strategic moves in preparing Calista to play a larger role in construction and operation activities in the region, as well as for the potential of the Donlin Creek mine, assuming it is built.

Brice is a 40-year-old company founded in Fairbanks. The company specializes in airport, road and port construction and has experience in handling the difficult logistics of supporting rural projects. Brice also owns its own fleet of barges and tug equipment.

Brice also has experience in hiring and training people from villages where projects are being done. Brice has a strong record for hiring of Alaska Native workers.

Calista already had a foothold in construction through two companies, Tunista Inc. and Tunista Construction LLC. The addition of Brice strengthens that position.

Established in 1945, Yukon Equipment is another experienced Alaska firm. The company has supplied equipment for most every major Alaska construction project since the building of the Alaska Highway in World War II. Yukon also provides a much of the heavy and snow removal equipment used on airports throughout the state.

Calista's other enterprises and business investments are diverse. Nordic-Calista Services operates three drilling rigs on the North Slope. Calista owns 20 percent of the company. Calista has employed shareholders on the drill rigs; drilling jobs are among the highest-paid in the state.

Another relatively new acquisition for Calista is Alaska Telecom Inc., a communications company that specializes in serving North Slope oil field customers, projects and operations working in remote locations.

Guy said Calista's plan is for the firm to expand into new geographic areas and take advantage of opportunities under the 8(a) program.

Camai Printing, a division of another wholly owned company, is an Anchorage-based commercial printing company. Camai is the only printer in the state with two 40-inch four-color sheet-fed presses. It also operates five other presses with varied capabilities.

Alaska Newspapers Inc., another Calista company, publishes six weekly community newspapers, along with First Alaskans magazine and a number of special publications.

Chiulista Services Inc. is a camp services, logistics support and expediting company that specializes in supporting remote industrial projects. In recent years, Chiulista Services has worked to support the field exploration and development work at Donlin Creek, and has expanded to support of other projects around the state.

Among other companies, Calista is a part owner of NorthStar Gas LLC along with NANA Development Corp. and 16 village corporations. NorthStar provides fuel services to Western Alaska, and is about to take delivery of a new fuel barge built for shallow water conditions that will be operated in a partnership with Delta Western, a veteran marine fuel operator.

NorthStar Gas will also offer deck-freight services with the barge.

Calista also operates a number of companies specializing in 8(a) contracting with federal agencies in fields like facility maintenance, fueling, laboratory services, aerospace technology and testing, and aviation support services as well as construction.

Mining for jobs

But development of the Donlin Creek gold project is one of Calista's highest priorities because of its potential for providing high-paying jobs in the region and business opportunities for Calista's companies and shareholders.

Calista Corp. itself discovered the gold mineralization at Donlin Creek. The corporation engaged geologists to survey federal lands that were available for selection after the Native claims act was approved by Congress in 1971 to identify areas with mineral potential. Calista hired its own geologists to provide in-house expertise.

Mining had always been an important activity in the northern parts of the Calista region. The area was a center for placer mining. Given this, it was logical for Calista to consider selecting lands with mineral potential.

Calista's geologists identified lode gold mineralization at Donlin Creek and felt it could have enough resources for a lode gold mine, a much larger operation than the placer mines that traditionally operated in the region.

Calista began efforts to attract an experienced mining company as a partner. Two companies worked on the property but backed out. Eventually the corporation attracted Placer Dome, an experienced gold mining company.

Placer Dome began work to explore the prospect in the 1990s and the initiative led to the current joint venture. Placer Dome was purchased by Barrick Gold and NovaGold Resources came in as a partner.

Like all resource extraction projects on regional corporation lands, 70 percent of Donlin Creek royalties will be shared with other Alaska Native corporations, a requirement of the Native claims settlement act.

Building a stronger regional economy will take more than a mine, however.

"Calista understands that ANCSA corporations were formed in part to improve each region's socioeconomic standing," Guy said.

Calista is focusing on three goals to accomplish this. First is building and strengthening the transportation infrastructure in the region. Second is to build renewable energy, the region has some of the highest energy costs in the nation. Guy said Calista and its leaders are now pushing for a hydroelectric facility, which could serve Bethel-area communities.

Finally, educational and job training opportunities are needed for a region with low graduation rates and few employment choices.

"The Calista Heritage Foundation was created in part to strengthen the scholarship fund and increase internship and training opportunities for students," Guy said.

Tim Bradner can be reached at

tim.bradner@alaskajournal.com.