Fortran made two pivotal moves recently to expand its telecom integration services business.
The Hickory, N.C.-based company last week secured $4 million in revolving capital from venture capital firm TCA Global Credit Master Fund. In addition, Fortran acquired Lexington, N.C.-based WynnCom, a co-location and cloud-based telephony services provider.
Fortran has currently drawn on $900,000 of the $4 million from TCA to invest in the business, said Richard Craft, CFO of Fortran. Craft said the funding was used to pay for the acquisition of WynnCom and to finance existing debt, while the remaining $3.1 million will be used for Fortran’s acquisition strategy.
"Now that we have our revolving credit in place, we have additional financing to keep growing fast," Craft said.
Fortran previously had attempted to find financing through local and big banks; however, a lack of hard assets and its size prevented it from doing so, said Craft.
"[They] wouldn't do it because we weren't big enough," said Craft. "If we were a $20 [million] to $30 million company, yes, but banks have gone away from lending to the small and middle tier that have $1 million to $2 million."
Compared with a bank, a venture capital firm's decision to invest in an IT company is determined by opportunities for continued development, said Craft. "Instead, a VC will look past [a small to medium size] and look at the potential growth of a company and feed money into it," he said.
Fortran acquired CCI Telecom, a Statesville, N.C.-based telecom systems integrator in the summer, bringing along 1,000 clients. "With CCI, it was a natural extension of our market area with a different product line of value and extended customer base, and now with WynnCom, it's the same thing," said Craft.
Fortran's clients include hotels, call centers, prisons, hospitals, schools and large manufacturing centers. According to Craft, Fortran's plan includes continued regional expansion across North Carolina and South Carolina and into Virginia, Georgia and Tennessee.
Fortran has tripled its size in just six months and will continue to look for new opportunities, said Craft.
"The $3.1 million left will be used for future acquisitions, and it will only use be used when making acquisitions," he said. "Our plans go way past WynnCom. This isn’t the last deal, and we plan on doing many more within the next two to three years."
PUBLISHED MARCH 28, 2014