Detroit — The city’s General Retirement System is getting a greater ownership stake in a prominent African-American media company as part of a resolution to a complicated financing arrangement linked to a bribery scandal involving ex-mayor Kwame Kilpatrick.
The recommendation for 49 percent ownership of Real Times Media was made Wednesday by the fund’s investment officer and supported by trustees. The fund has yet to decide on whether it will take the company’s existing headquarters building that’s estimated to be worth about $1.5 million.
The approval served as a counter-offer to a proposal the media firm’s CEO Hiram Jackson made to the board last month. At that time, Jackson said he would give the fund the building and a smaller increase in the fund’s existing minority ownership.
Ryan Bigelow, the GRS fund’s investment officer, told the board that Wednesday’s recommendation “gives us a little bit of the control that we need.”
The agreement nearly concludes a years-long transaction that began with $15.5 million in loans provided to the media firm in 2007-08 to consolidate debt and fund its growth strategy.
The loans, approved under a prior GRS board, allegedly lost the pension fund $13.3 million and were referenced in a federal bribery and kickback case involving former Detroit mayor Kwame Kilpatrick, Kilpatrick's fraternity brother and ex-Detroit Treasurer Jeffrey Beasley and three others.
Real Times has not been charged in the indictment, nor are any company officials.
Real Times repaid about $3 million on the loans before the company and pension board agreed to convert the outstanding balance to equity. The revised deal gave the fund an ownership stake in Real Times.
Jackson said Wednesday that he’s accepted the terms brought before the pension board.
“We’re looking forward to a great future with a great partner,” he said.
The board must still make a determination on whether it will accept the Real Times building or seek to have the firm sell it on its own and hand over the proceeds.
Bigelow noted that Jackson’s firm has already been approached by a prospective buyer.
Pension trustees agreed Wednesday to further evaluate the two options and delay a decision for 30 days.
Jackson has said Real Times no longer has use for the building. The company purchased a building on Randolph last year and plans to relocate its employees to the new, three-story headquarters by the end of the year.
The resolution will also allow Real Times to pay off a preferred stock it created for the pension fund, in addition to providing the fund a 35 percent stake in the company after the debt was converted. The firm has valued the stock at $3.5 million, Jackson said.
Jackson said the building is valued around $1.5 million and is located in a prime spot, within a half-mile of the future site of a new Red Wings hockey arena and entertainment district.
Jackson’s multimedia empire includes some of the country’s largest black-owned newspapers and the Detroit-based Michigan Chronicle.
Jackson says the company has brought in profit in its last eight quarters and is negotiating to acquire two major multicultural media firms.
Tina Bassett, a spokeswoman for the GRS fund, has said the fund invested in the company because “we believe in their future.”
Trustee Wendell Anthony at Wednesday’s meeting echoed the fund’s support for the partnership, saying Jackson is “innovative” and “on the right track.”
In the federal bribery indictment, prosecutors claimed Real Times was among several companies that allegedly gave funds to Kilpatrick's nonprofit, the Kilpatrick Civic Fund, in exchange for favorable treatment from Beasley and city pension funds.
The indictment did not identify Real Times by name. Instead, the firm is called "Company I," but interviews with sources, dates listed in the indictment and pension fund meeting minutes indicated that the firm was Real Times.
According to court records and pension fund meeting minutes, Real Times received the loan after the firm and its unnamed consultant allegedly gave $45,000 to the nonprofit.
Jackson and officials representing the company have denied any link between the loans and money given to the civic fund.
Kilpatrick was found guilty last year of defrauding donors and spending money on personal expenses.