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Ofek
Capital Corp. concentrated on building out their business and expanding in the used car
leasing marketplace
Financing
Mortgage Banking
(OTC Pink Sheets: OFCC)
Ofek Capital Corp.
592 Sheppard Avenue Fest - Unit 521
Toronto, Ontario M3H6A7
Phone: 416-736-4800
Shalom Romm
Chairman and
Chief Executive Officer
Interview Conducted By:
Diane Reynolds, Co Publisher
CEOCFOinterviews.com
November
2002
Bio of CEO/Chairman, Mr. Shalom
Romm
Ofek Capital CEO and Chairman, Mr. Shalom Romm immigrated to Canada in 1979 and has since
held numerous management and equity positions in small to midsize enterprises. With
24 years of expertise in real estate, construction, investment, international trade,
manufacturing, distribution, consumer and trade exhibitions, Mr. Romm has established
business relationships in Canada, the U.S., Far East, South America and the Middle East.
Company Profile:
Ofek Capital Corp. is a North American financial services company that operates within the
sub prime lending and financing market. Ofek believes that the sub prime market is the
most lucrative niche in the financial services industry.
Ofek through its subsidiaries, offers
used car leases in Ontario, evaluating a number of equity involvements, funding and
investment prospects in Canada and the U.S.A., anticipates offering traditional mortgage
banking services in 24 states and has patent pending, automated submission and lending
approval process which as a developed software will be state of the art and capable of
generating immediate loan approval from multiple loan providers.
Ofek Capital subsidiaries include:
AJM Leasing, Venture Capital, Mortgage Bankers of North America, and SecondaryMarkets.
CEOCFOinterviews: Please give my readers a little detail about Ofek
Capital and what it is doing today.
Mr. Romm: Ofek Capital Corp. is a young enterprise whose
primary focus is their financial services subsidiary, AJM Leasing. AJM provides used car
leases to the sub-prime market. We have a mortgage banking entity in California,
which is in the process of reorganizing. It will also target the sub-prime market.
Our primary business is providing financing to the sub-prime market.
CEOCFOinterviews: You're based in Canada, but you also have
some businesses here in the US. Could you tell us a little bit about those?
Mr. Romm: We have a mortgage banking entity, Mortgage Bankers
of North America, in Rancho Cucamonga. It has been in existence for about six years
serving twelve different states as a mortgage banking facility. It is in
reorganization because we intend to operate it differently than in the past. We are
currently concentrating on generating more capital to fund AJM Leasing, our used car
leasing operation in Toronto. The plan is for AJM to expand as rapidly as possible
throughout Canada, as well as the United States. The potential market of the used car
leasing market is absolutely tremendous. Our growth in the used car leasing business will
only be limited by the amount of capital that we have available.
CEOCFOinterviews: I know mortgage rates are pretty good right
now and I know you are doing some restructuring but how much of a drain is that to the
Company today?
Mr. Romm: None at all. We are not allocating funds to the mortgage
subsidiary at this point. The program we are concentrating on is used car leasing. Our
current position is to finish raising capital for the AJM Leasing subsidiary.
CEOCFOinterviews: With everything being done online today
people can be approved within minutes for a loan. Are you addressing that area?
Mr. Romm: True, the Internet provides the communication
infrastructure that will allow a lot of people access and approvals in a much faster
environment. And, we are developing a process that allows online applications and
approvals. It is called "Automated Submission Analyst Program
(“ASAP”)". We have a patent pending. Anyone using an automated approval
system service with more than one specific provider will be able to use our system, paying
us royalties. We have the structure and will use it in a patented environment. We
are not doing anything with it at this point in time because it requires a heavy capital
investment that we don't have in place yet. We are looking at different areas, like joint
ventures with possible strategic partnering, to get it off the ground. To date, in
the mortgage industry in particular, there are a number of entities that provide a
semi-automated structure in which you file an application online and the back room
provides a manual disposition of your application whether it is approved, rejected or
renegotiated. When our program is complete, it will be completely automated and
approvals can be done within seconds.
CEOCFOinterviews: I know back in July you had released your
second quarter financials and the revenues were up 33% from a year ago. What can you
say attributed to that?
Mr. Romm: The acquisition of AJM Leasing. Although it is part
of a corporation that has been around for 30 years, AJM did not do much financing until
six years ago when it came into the used car sub prime-leasing environment. When we
acquired it in November of 2001 the revenues generated by AJM, as well as its assets,
became part of Ofek consolidated statement.
CEOCFOinterviews: So this acquisition was vital to the growth
of the Company.
Mr. Romm: Absolutely. It is a significant part of our
core business.
CEOCFOinterviews: Prior to that acquisition, what was driving
the Company forward?
Mr. Romm: The mortgage banking operations out of California.
CEOCFOinterviews: So you put that on the side for now and
focus on the used car sub-leasing?
Mr. Romm: Exactly, the used car leasing has a better
foundation and can expand in a way that is most beneficial to us.
CEOCFOinterviews: Right now, AJM is operating from Toronto.
Do you see moving into the US?
Mr. Romm: Yes, but we don't have any specific time targeted.
We will finish allocating resources in Toronto and Canada first, which should
probably be in a year or year and a half. I estimate that approximately a year from now we
will be expanding into the United States.
CEOCFOinterviews: Will you
expand through acquisitions?
Mr. Romm: Not through acquisitions; we don't think so. To
date we haven't seen too many people in the market who are capable of expanding through
internal growth and probably not as fast as we can do it. Therefore, unless there is
a good chance of us picking up a profitable existing small operation at a very attractive
price, I think we will probably expand from within.
CEOCFOinterviews: Since this is prime time for mortgage
bankers and brokers, isn’t it something you should be looking into now? You don't
want to fall short and then try to get on the bandwagon when it's over. How are you
going to fit into that category?
Mr. Romm: Mortgages are always in need. We don't
foresee a timing scenario problem. We go for quality in what we do. The price and
the service at the end of the day, that is what wins. We are not in a rush.
CEOCFOinterviews: How are you going to maintain your
competitive edge?
Mr. Romm: Speaking from my 24 years of experience, I believe
that when you provide a quality service and quality product to a customer, that is all you
need to do, and that is what we do. Having competition is great. The more the
competition, the better we look. We believe that we will prevail at the end of the day.
CEOCFOinterviews: You had 24 years in management and equity
positions, what do you feel you have brought to this Company?
Mr. Romm: The ability to find quality personnel, partners,
joint ventures, participants, and then motivating them all towards an organized success.
CEOCFOinterviews: Do you feel you have your players in place?
Mr. Romm: Never. You always require additional players
in additional markets. In the existing markets, you live and learn from day to day.
Even the best people change over time as their needs and requirements change. We
are always on the lookout for new good people.
CEOCFOinterviews: Do you feel the Company is
financially situated so it can grow? Do you feel the Company can grow in all of the
areas that it needs to?
Mr. Romm: It is all contingent on the amount of capital that
becomes available to us. We have been exploring, and will continue to explore,
different ways to raise capital at an effective cost for the organization. We will
allocate the capital based on the most profitable environment that we see in our
structure. If we need to change, we will. But as far as we see right now, we will
able to achieve our goals subject to getting the required capital in place.
CEOCFOinterviews: I think that is the thing that the Company
needs to focus on: where to find the capital, how to find the capital, and how to insure
that the capital can maintain the Company.
Mr. Romm: Correct and since capital is vital to an
organization and feeds all of the rest of the parts, we intend to get the best return
possible and succeed. Right now for example, the focus is on the used car leasing
business because this is a very profitable venture on its own. When it pours over
into the consolidated structure, it is a little bit less apparent that it is AJM is a
division on its own. Its earnings before income tax, interest, depreciation and
amortization is roughly about 48% of the revenues, which is superb compared to any other
form of capital that is available out there.
CEOCFOinterviews: What would you say to a potential
investor looking at this Company for the first time?
Mr. Romm: The used car leasing market is a market where money
can be made. We have the management, the business facility and structure, and the
business plan. Used car leasing is an extremely financially healthy market, and Ofek
is profitable as a venture with the ability to further expand into a very large scenario.
Used car financing in North America is a $160 billion dollar a year industry. The
possibilities for us are huge. Considering the share price of Ofek right now, the amount
of shares outstanding, and the amount of participants, Ofek is quite attractive. And yet,
we are a much better company than the current share price shows. We just aren't there yet.
CEOCFOinterviews: Do you feel if the economy were to
change in any way that it will affect the Company? Do you feel it is economy proof?
Mr. Romm: I know it is economy proof. No matter what the
economy is you will always have people who choose to acquire cars that are used. By
definition, the car falls into the sub-prime market, if it is old enough. Depending on
which jurisdiction, roughly four-five year old cars automatically fall off prime-lenders
charts into the sub-prime lenders category. People have the impression that
sub-prime means that it is the bottom of the barrel. This is definitely not the
case. It's the product that primarily dictates the lending category. Granted, the
people also may qualify for the sub-prime category based on their credit rating but we all
fall into this category at one point or another in our lives. Many of us are in that
category at some time in our lives based on change of work, residence location, health
reasons, divorce, and just life situations. Sub-prime has no negative stigma to it.
I am not worried about the market being there or not being there based on economy
disposition. It doesn't affect our business.
CEOCFOinterviews: Do you have any closing comments for my
readers?
Mr. Romm: I would like to say that the one part that bothers
me when I speak to potential investors, to shareholders, and to people in general is their
lack of true perception of the business ability of the management, the management being
the quality core of the business, the reason for the profitability of the Company. It
seems investors are chasing returns only and not paying attention to the quality of the
management. Hopefully now, they will begin to return to what is the right way to evaluate
the potential of a company. I think if people would focus on when management does it
right, a lot of companies, not just us but other good companies too, would be creating
rewards for everyone and ultimately better financial markets.
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