PAUG-VIK INCORPORATED LTD.
From: Lucy Goode, Paug-Vik General Manager
Subject: Annual Letter to Paug-Vik Shareholders
Greetings Paug-Vik (Pvil) Shareholder Members,
The intent of this document is to inform Paug-Vik shareholders on the business dealings of Paug-Vik Inc. Ltd. that have transpired over the past fiscal year.
- In June of 2016, the Pvil Board approved a sheet pile project on property that is being sold to Copper River Seafoods (CRS). The project reclaimed some lost shoreline and provided CRS with improved access to the river. CRS had another great season and reported processing approximately six million pounds of salmon. CRS also made a commitment to stay later in the season as long as there was a strong local fishing force to keep them busy. This year they continued buying long past the date that most processers have traditionally left town, meeting one of Pvil’s goals in finding the “right” buyer for the property.
- Pvil and BBNC met in January to renew our Subsurface Materials Agreement. The negotiations were successful and we secured a contract for five years. In addition to the contract, BBNC and Pvil discussed the possibility of purchasing a set of scales to improve our accuracy and efficiency. This is costly equipment and we will research the potential payback of using this system in our pits. Additionally, Pvil is interested in using more modern methods of doing our pit surveys. BBNC is in the process of developing a vetted drone survey program, something that could save Pvil time and money. Finally, gravel sales were improved this year and there is a possibility that the SOA/DOT projects renovating the King Salmon Airport and building the King Salmon Airport Taxiway will increase our sales in the near future.
- In the past year Pvil shareholders have had apparaisals of their property completed so that they could move forward with a purchase of the property. No sale of leased property has occured this year and with the deadline of October 31st, 2017 looming, the Pvil board decided it would be in shareholder’s best interests to approve a ten-year extension on the purchase option.
- This past year Pvil has worked with the services of the Foraker Group to assist in the update of their employee, board of director and strategic plan. This is a work in progress.
- Pvil’s Shareholder Trust account has been transferred to the First National Bank of Alaska, a bank that has experience managing trusts and has a trust department located in Alaska. Porter & Allison, Inc. have been secured to compile the trust’s financial statements until the trust activity warrants a regular audit. An Investment Policy was adopted by the Pvil Board. The investment policy aligns well with the goals of the trust and will allow the Pvil Board to move forward in securing financial advisors and investing the Trust funds.
- Pvil received 7i funds in the amount of $376,382.53 in April, 2017. Since 2011, Pvil has put aside a portion of the 7i funds to go to the trust account for the shareholders dividend. This year a majority of the 7i funds had to be directed toward environmental contamination on one of our leased lots. The contamination was due to a former lessee of Pvil’s who had abandoned his lease during bankruptcy proceedings. The State of Alaska and Department of Conservation required the removal and remediation of contaminated soil and asbestos-containing materials from structures on the property. PVS, a PDC subsidiary, has been secured to oversee this project. The asbestos removal has been completed, leaving the demolition of the trailers and removal of contaminated soil from the property. Pvil foresees some economic opportunities once the property is returned to usable shape.
- Pvil hired the REMAX Company to sell some underperforming assets; a few rental properties in Naknek and some units in King Salmon. After consultation with financial and property experts it was determined the selected properties were not generating a profit for Pvil and it was fiscally prudent to divest ourselves of them.
Thank you, and as always, please contact the Paug-Vik Office with any questions you may have. If you have not voted, please remember to vote your proxy at the annual meeting or vote online at www.paugvikvote.com.