Alaska Investment Is No Seward’s Folly
For Wall Street investors, an annual dividend of $2 to $3 per share is about as good as it gets. So one might only imagine what the reaction would be to receiving $650 per share in dividends in six months.
That’s been the payout to the 7,000 or so shareholders in Cook Inlet Region Inc., an Alaska Native corporation that hit it big in the telecommunications business.
Some $408 million has been paid out to the shareholders, all of them Native Alaskans and most owning 100 shares in the corporation. The typical recipient was handed $50,000 tax-free in December and another $15,000 in May.
Many have invested their windfalls, while others have gone on spending sprees--cars, homes, starting new businesses and retiring debt.
The money was an unexpected luxury for Robert Singyke, a retired federal worker living in Anchorage, who got $97,500 by virtue of holding 150 shares.
“This has given me the opportunity to enjoy some things I wouldn’t otherwise be able to afford,” said Singyke, 65. He paid off his wife’s new sport utility vehicle, expanded their mutual fund portfolio and bought a 17-foot motorboat for salmon fishing on the Kenai River.
“I sometimes wonder, though, what it means to others,” he said. “Like a single mother who doesn’t have what I have.”
Rita Jorgensen, a Cook Inlet Region shareholder living in Denver, is one of those single mothers. With the first check, she made a down payment on a $225,000 home.
“I went from living in the projects to owning one of the better homes in Denver,” said the 35-year-old factory worker. “It’s not only an environmental change; it’s an emotional change, a mental change, a financial change.”
Neither Cook Inlet Region nor state economists knew of anything near the magnitude of the dividend, funded through the corporation’s sale of 4.1 million shares of VoiceStream Wireless Corp.
From a payroll standpoint the distribution equals about 11,750 jobs paying $34,700, the state average last year.
On an individual basis, the payouts dwarfed the annual Alaska Permanent Fund dividend, paid out to all eligible Alaskans from the state’s multibillion-dollar oil wealth savings account. Last year’s state dividend was worth a mere $1,964 per person.
Cook Inlet Region is one of the 13 Alaska Native regional corporations established by the federal government in 1971 to settle aboriginal lands claims that had blocked construction of the trans-Alaska oil pipeline. As part of the deal, the corporations divvied up nearly $1 billion in seed money and 44 million acres of land.
Some have fared better than others over the years, and Cook Inlet Region the best of all.
The Anchorage-based company has holdings across the nation-- commercial and resort property, construction, tourism. Its most lucrative deal was a joint venture with VoiceStream that secured licenses to provide wireless communication services in Chicago, Dallas, Philadelphia, Detroit and other major U.S. markets.
Late last year Cook Inlet Region’s board voted to exchange its wireless telephone partnerships for 7.5 million shares of VoiceStream stock, more than half of which was sold to fund the dividends.
A dramatic jump in car sales followed the distribution. Many dealers offered special deals to shareholders, but even those who didn’t advertise cleaned up.
“People were buying left and right--not only here, but all over town,” said Paul Van Hoek, general sales manager at Tony Chevrolet in Anchorage.
National Bank of Alaska, like other financial institutions in Anchorage, saw a big jump in activity by shareholders, most notably in new accounts and home loans.
NBA helped the corporation set up financial workshops to provide investment advice to shareholders. The bank also held a session at Beans Cafe, a soup kitchen serving the city’s homeless, to help a handful of shareholders open accounts so they could receive their money through direct deposits.
“This money has helped a lot of our clients get ahead, helped families succeed in a once-in-a-lifetime transition,” said Gloria O’Neill, president of Cook Inlet Tribal Council, a nonprofit social service agency. “For the most part, our shareholders made wise decisions.”
And in Judy Huddleston’s case, a necessary one.
Huddleston, 52, was living from paycheck to paycheck as a travel agent in Seattle. With the extra money, she could afford to pay for a long-delayed medical procedure. She also allowed herself one “wild and crazy” purchase: a $700 high-powered spotting scope to better enjoy the view from her condominium.
