FAIRFAX - The Chairman and CEO of ProGrowth Bank (PGB) presented a project financing status update of the RS Fiber project Thursday at the Fairfax Auditorium.
Phil Keithahn of Gaylord, a Benson native, majority shareholder of Sterling Capital Advisors, Inc. (SCA) and PGB was recently hired as the financial advisor by RS Fiber Cooperative to obtain $40 million financing for the project that would provide fiber optic internet, telephone and television service to Sibley and Renville counties plus some parts of nearby counties.
Keithahn, a graduate of Carlton College and Harvard Business School, said he worked with large agricultural corporations for Wells Fargo Bank in the Twin Cities before trading the metro area for rural Minnesota.
"I learned living in a small town that rumors speak loudly but facts don't speak for themselves," he said. "My Dad told me respect people even if they don't believe the same things you do. I hope you join the project's Joint Powers Board and help this project become successful. Government USDA and FDIC funds could pay for 75 percent of the construction cost. If we get 50 percent or more (customer) penetration, the project will pay for itself. There is not a significant risk to taxpayers."
Keithahn has studied the project for hundreds of hours and called it "financially viable," teaming with Winona-based Hiawatha Broadband, a 20-year-old entity owned by the creator of Fastenal that set up fiber optic projects in Winona and is going into Red Wing, Hastings and other southeastern Minnesota cities.
"My findings will be validated by government lending agencies," Keithahn said. "The State of Minnesota is eligible for $60 million in federal economic development funds but has never applied for it. We plan to apply for $10 million of it for this project."
The projects finance team includes recent Oppenheimer retiree Ralph McGinley and New York investment banker Bill Loewenstein, Keithahn said.
The RS Fiber project would show positive cash flow two to three years after ramp-up, expected as soon as July 1, 2015. Construction would be complete between 2016 and 2018.
Cities and townships have until April 30, to approve joining the RS Fiber Joint Powers Board.
Winthrop City Administrator Mark Erickson said cities of Fairfax, Buffalo Lake, Stewart, Brownton, Gaylord, Winthrop, Gibbon, Green Isle and Lafayette and the townships of Bandon, Cairo, Kelso, Grafton and Transit have approved joining the board. The City of New Auburn is set to vote on joining the board next week, Erickson said.
Several farmers in nearby townships in Nicollet County asked about joining the project. Keithahn said customers who join the first phase of the project would get the lowest rates. The rates could average about $25 less per month than existing internet, telephone and television providers offer. Keithahn said business service rates would be much less costly, possible several hundred dollars a month less than existing providers charge.
For more information, visit www.rsfiber.coooper or rsfiber.com
(Fritz Busch can be e-mailed at firstname.lastname@example.org).