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Wrangling Over 'Wrapping' 20100920-NEWS--0001-NAT-CCI-CD_-- 9/17/2010 6:53 PM Page 1 ® www.crainsdetroit.com Vol. 26, No. 39 SEPTEMBER 20 – 26, 2010 $2 a copy; $59 a year ©Entire contents copyright 2010 by Crain Communications Inc. All rights reserved Page 3 What a bargain: $60 million Pistons bidder Wrangling buys $225 million loan on Chrysler HQ building HMOs post higher net income for first half of year shot for Delphi over Inside Candidates say they’ll ‘wrapping’ change or end MBT, Page 4 Insurers raise rates Second Stage Extra Banks warn accounting rules for employers who could dry up biz lending, use cost-cutting plan Page 12 BY JAY GREENE CRAIN’S DETROIT BUSINESS Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then “wrap” the plans by buy- COURTESY OF PLATINUM EQUITY LLC ing gap insurance or giving workers subsidies “I think it needs to be a fair deal,” said Tom Gores of his bid to buy the Detroit Pistons. “If you overpay, to cover the deductibles. you’re not going to have the right structure to be good to the customers.” The reason? Insurers say usage of health care services is going up because employ- Private-equity baron has Michigan ties ees bear little or no responsi- bility for health care costs. BY BILL SHEA “Often, employers go the CRAIN’S DETROIT BUSINESS TOM GORES high-deductible route and Crain’s List then cover the deductible by Tom Gores isn’t a household name in metro Ⅲ Age: 46 funding an employee’s Detroit, but he could be this fall. Ⅲ Born: Nazareth, Israel. Came to Michigan in (health savings account) to a Largest Oakland County He nearly bought Troy- 1968 and is a U.S. citizen. Selinsky Ⅲ point where the employee no employers, Page 14 based auto supplier Delphi Family: Wife, Holly. Three children. longer has any skin in the game,” said Steve WEB EXTRA Holdings LLP for $3.6 billion Ⅲ College: Michigan State University Selinsky, director of sales and marketing with Blog: More on last year and now is rumored Ⅲ Company: Beverly Hills, Calif.-based BeneSys, a Troy-based third-party administra- Tom Gores, to have the inside track on be- Platinum Equity LLC, launched in 1995. Annual tor of insurance services. This Just In crainsdetroit coming the next owner of the revenue of $11 billion in 2009. But employers and their insurance agents .com/shea Detroit Pistons, although nei- Ⅲ Residence: Los Angeles; has a house in are crying foul. They say the insurers, includ- Bill provides at least $78M ther he nor anyone involved Grosse Ile. ing Priority Health and Blue Cross Blue Shield of to state for small-biz loans will talk much about it. Michigan, are taking away an important cost- A source familiar with the situation said said she wants a sale done by the time the sea- containment option that can save them $500 to The U.S. Senate approved bids for the team were submitted by Gores and son starts next month, so a decision is expect- $1,000 per employee. a $30 billion small-business an undetermined number of other bidders ed soon. Mike Krause, president of Krause Benefits, lending bill last week that around Labor Day to Citi Private Bank’s sports If he becomes the Pistons’ owner, Gores said said employers are upset with the new pricing will provide a shot in the finance and advisory team, which was hired his style would be hands-on, but not to the strategy. Some employers spend $4,800 a year or arm toward small-business to broker a sale. loans in Michigan. Current team owner Karen Davidson has See Tom Gores, Page 25 See Wrapping, Page 21 The bill addresses the diffi- culty small businesses have in obtaining credit. It is expected to provide at least $78 million to Michigan, said Paul Brown, manager of Ford House’s virtual tour gets real national attention capital access for the Michi- gan Economic Development BY SHERRI WELCH launched this summer to enhance interviews on topics like the es- Henry Ford and longtime presi- Corp. CRAIN’S DETROIT BUSINESS tours for grounds visitors and to tate’s landscaping and home dent of the car company. A portion of the funding put the estate within reach of dis- movies shot by Edsel Ford, The application is designed to will go toward the Michigan The Edsel & Eleanor Ford House is tant virtual visitors. the son of Ford Mo- make an in-person site visit a rich- attracting local and national atten- See This Just In, Page 2 The software application — tor Co. founder er experience. For example, tion for the new virtual tour it which includes a virtual tour of See Ford House, Page 22 the estate with 60 minutes of con- tent that is available for download A smart phone displays a to iPhones, iPads and smart building at the Edsel & phones or for viewing during tours Eleanor Ford estate — part on an iPod Touch loaned from the of an interactive app that museum — makes available for lets tour visitors call up Ford family letters, photos, the first time one-of-a-kind items film clips and more. It’s for public viewing. been downloaded 800 times Those include family letters, NEWSPAPER since its launch six weeks photographs, oral histories, expert ago. COURTESY OF EDSEL & ELEANOR FORD HOUSE 20100920-NEWS--0002-NAT-CCI-CD_-- 9/17/2010 6:16 PM Page 1 Page 2 CRAIN’S DETROIT BUSINESS September 20, 2010 play a 1080p image or receive one Gaynor expects to double the rev- school will be revealed during THIS JUST IN The way it was: 2003 via an over-the-air broadcast an- enue of the Texas locations with- the Thursday press conference. tenna. in three years. — Dustin Walsh ■ From Page 1 Throughout our 25th-anniversary A 1080p television can display — Daniel Duggan year, Crain’s will use this space a signal with a minimum of 1080 Supplier Diversification Fund, to look at interesting items from pixels of vertical resolution. New office hires veteran broker which provides gap financing to past issues. Attorneys at Detroit-based Skillman-led coalition to unveil Chicago-based real estate com- suppliers seeking capital loans. Miller, Canfield, Paddock and Stone plans for new high school pany Advocate Commercial Real Es- The fund began last year with PLC, which represents both ABC tate Advisors LLC is expanding in It is obvi- The Detroit Edison Public School $26.3 million in funding, and Sony, sought to have the lat- the area with the hiring of veter- “ Academy will unveil its plan on $17.3 million of which already est version of the lawsuit dis- an commercial real estate broker ously not good Thursday to build a college prep has been doled out to companies missed in separate motions filed Sam Munaco and the opening of high school near Eastern Mar- like Chesterfield Township- news, but it is in June. But Borman last week an office in Southfield. ket. based Motor City Stamping Inc., denied that request on all Munaco has been named presi- The DEPSA Early College of which needed $2.4 million in gap manageable. grounds, and scheduled a trial dent for the Detroit-area office of Excellence charter school will be financing to qualify for a $5 mil- date next August. the firm, leaving his 20-year posi- ” the first new school funded by lion loan from Huntington Bank. Paula Angelo, Delphi Corp. Plaintiffs David Date of Michi- tion as a principal at Southfield- the Michigan Future Schools Initia- The bill requires the funding From an April 28, 2003, article gan and Elliott Handler of New based Signature Associates. He tive, a coalition led by the Skill- be leveraged at a 10-to-1 ratio, so about Standard & Poor’s reviewing York allege the televisions they said the move is an opportunity man Foundation. $78 million would support Delphi and three other auto parts- purchased cannot receive 1080p to fill the niche of firms that rep- The new school’s curriculum $780 million in loans throughout makers for a possible debt rating signals through any input source resent only tenants, rather than will serve ninth- through 12th- the state. cut over the companies’ unfunded except by an over-the-air anten- also doing leasing assignments graders, and will be designed The bill is expected to pass the pension and retiree medical na. for landlords. liabilities. Delphi shed many of with a heavy focus on science U.S. House this week, Brown The lawsuit alleges violations Advocate has been working on those obligations when it emerged and math. said. of consumer protection and war- deals in the Detroit market for from Chapter 11 bankruptcy in The building will feature — Dustin Walsh October 2009. ranty laws. seven years but has not had a lo- — Chad Halcom “green” engineering thanks to cal office, said CEO Craig Braham, the help of the Engineering Society representing tenants such as De- that their (the companies’) inter- Judge refuses to dismiss case of Detroit, Ralph Bland, DEPSA’s troit-based Clark Hill PLC and De- pretation of the phrase ‘1080p’ TNG buys Texas’ Salon Source superintendent said in a press re- troit-based Kitch Drutchas Wagner against ABC Warehouse, Sony carries the day” in dismissing a Farmington Hills-based beauty lease. It will also be part of the Valitutti & Sherbrook P.C. It is the lawsuit that alleges the compa- supply distributor TNG Worldwide Pontiac-based ABC Warehouse third phase of the Detroit De- company’s first office outside nies falsely overbilled the capa- has acquired a Texas-based beau- Inc.
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