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ANCHORAGE - Overdue financial reports reveal Kenai's Native corporation is nearly broke.
In a recent letter to shareholders, Kenai Natives Association said uncollected rents from its pull-tab parlor leases and poor performance by a startup computer subsidiary contributed to losses going back more than two years.
KNA became one of the biggest players in the state's charitable gambling business in 1999, when it bought out a gaming supply company and the rights to Rippie World and other pull-tab storefronts in cities statewide.
"We have spent the last two months trying to sort out what has happened at KNA, as well as determining what went wrong and why," the Aug. 1 letter said, referring to a May 15 letter from the company's accountant, the Anchorage Daily News reported. "The accountant stated that KNA was insolvent, and hard, sound business decisions needed to be made quickly, that KNA's available reserves would be expended in no more than six months at the current rate KNA was operating. Also KNA had lost substantial revenues in the form of uncollected rents from our gaming leases."
the letter said.
Kenai Natives Association is among a handful of small-city Native corporations, set up like village corporations to hold land and other assets under the Alaska Native Claims Settlement Act. KNA has about 20,000 acres in the Kenai area.
Four years ago, corporation leaders say, they had more than $3 million in the bank after selling Kenai River land to the federal government and paying dividends to KNA's 510 shareholders. KNA president Wayne Wilson and corporate secretary Susan Wells said they were assured by managers and officers who led the corporation over the past three years that the businesses were doing well, even when hard numbers weren't available.
"It was a shock," Wilson said of the news this spring that the cash reserves were nearly gone. Wilson assumed the corporate presidency in May.
After the release in February of a grim, belated annual report for 2000 and a portion of 2001, shareholders replaced two members of the corporation's board. An outside financial review was launched and an internal audit will be conducted before the next annual meeting in October, company officials said.
Wilson said the board is considering hard options to restore the corporation to health. KNA has already laid off several employees, including chief operating officer Mike Slezak, who was a Rippie World manager before taking the reins in Kenai.
The Aug. 1 KNA letter singles out the computer subsidiary, Alaska Native Communications, as the biggest source of recent operating losses. The new subsidiary was set up to provide training and computer services, company officials said.
All told, KNA lost $1.1 million during the 27-month period ending March 2002, according to the Aug. 1 letter.
KNA has retained a law firm to "review and analyze the situation with regards to our gaming leases and subleases" and to advise the company on options for a Chapter 11 bankruptcy filing, the Aug. 1 letter said.