RFC Capital Corp. Featured

10:01am EDT July 22, 2002

Talk about repositioning. Last year brought a new name, a new director of marketing position and a diversification of products to RFC Capital Corp. It’s the only way Chairman and CEO Steve Jaffee says RFC could capitalize on all the potential business opportunities in the fast-growing telecommunications industry.

RFC Capital Corp. is not a telecommunications company itself. Rather, it provides financing to such entities. And with the ever-increasing number of smaller, undercapitalized telecom service providers across the country—and the mandated break-up of state-run telecom services in Europe by the first of next year—1999 could be a huge year for RFC.

“It’s incredible how many opportunities there are in this telecommunications industry,” Jaffee says.

Jaffee expects his two newest financial products—mezzanine capital and equipment lending—to boost his customer base by at least a quarter in the coming 12 months. In addition, RFC will roll out a new program, tentatively called enterprise value loans, in the very near future.

“We generally advance cash only when we have 100 percent collateral in the form of receivables,” Jaffee says, “But when we like the company, when we like their management and we like their financial condition, we can advance cash based on the enterprise value of the organization.” Such flexibility should make RFC a more attractive financing alternative to traditional funding sources such as banks, which tend to adhere to strict collateral requirements.

RFC is also pondering a move into an investment banking type role where it could help telecom companies interested in a sale or merger find a suitable deal.

“The more [financial] solutions you can offer, the more likelihood you’ll be the provider of choice,” Jaffee says.

Jaffee will take that message abroad in 1999 as he actively solicits customers in European markets, where telecom competition is in its infancy. Already he’s finding ways to give RFC an edge over would-be competitors by joining the European Competitive Telecommunication Association, a trade group formed specifically to address the needs of telecom companies trying to break into newly deregulated areas.

“We’re the only finance player that is a member of ECTA,” Jaffee says. “As new entities are formed, they’ll come to us.”

To prepare for this anticipated onslaught of business, Jaffee is close to raising a third round of equity for RFC valued at $10 million to $20 million.

Look for RFC to cut deals in Germany, Spain, France and possibly Italy this year, en route to doubling its sales volume for the second time in two years. This might also be the year RFC signs its first Central Ohio customer.

RFC Capital Corp.
130 E. Chestnut St., Columbus
Top officer: Steve Jaffee
Founded 1995
Employees: 23
Estimated 1998 revenues: (Would not disclose)
Revenue growth, ’97 to ’98: 100%
Revenue growth, ’96 to ’97: 600%
Ownership: Private

Major Clients: Genesis Communications International; Network Communications International Corp.; NewTel Inc.; Mobile One of Ft. Lauderdale, Fla.; Access One Inc.