PROVIDENCE, R.I. – Rhode Island leaders are working to help former Red Sox pitcher Curt Schilling's video game company remain viable after it failed to make a scheduled $1.125 million payment to the state's economic development agency.
Gov. Lincoln Chafee said Tuesday that the state must do "everything possible" to assist 38 Studios and prevent the state from having to pay the Providence-based company's debts.
38 Studios was lured from Massachusetts in 2010 after Rhode Island offered a $75 million loan guarantee that state officials said would help bring hundreds of jobs and millions in tax revenue. Under the deal — the first done under a loan program created in 2010 — the company agreed to pay the state's Economic Development Corp. an "annual guaranty fee" each May 1.
The Economic Development Corp., whose board approved the agreement, has scheduled an emergency meeting Wednesday to address an "unexpected occurrence that requires immediate action to protect the public regarding the 38 Studios, LLC financing," according to the agenda.
Chafee declined to say whether the state would be asked for concessions — or financial support — to help 38 Studios remain afloat.
"The most important thing, going forward, is the viability of the company," said Chafee, an independent. "We're looking at everything."
House Speaker Gordon Fox said he began hearing "inklings" about trouble at the company a few weeks ago, but still doesn't have the necessary information to gauge the company's health.
"It's technical financial stuff," said Fox, D-Providence. "You have to figure out the details before you can say anything."
A representative of 38 Studios did not immediately return a message left by The Associated Press. Schilling also could not be reached.
The company released its much-anticipated first game, "Kingdoms of Amalur: Reckoning," to strong reviews in February.
Chafee and others criticized the loan guarantee at the time it was offered, saying it was putting taxpayer money at risk to help a company with no track record of success. During his run for governor, Chafee called it "one of the biggest risks I've ever seen."
"It's irrelevant now," he told the Associated Press on Tuesday. "Now we just make good decisions going forward."
EDC Executive Director Keith Stokes said at the time the board determined the loan agreement was a "calculated risk well worth taking." Stokes said the board performed months of "due diligence" in analyzing the gaming sector and 38 Studios and crafted a loan guarantee agreement that included strict performance benchmarks.
He said the agreement went "to great lengths to safeguard taxpayers and ensure economic performance."
Judy Chong, a spokeswoman for the Economic Development Corp., whose board approved the loan guarantee, said Tuesday she had no information or comment. Board member George Nee also declined to comment.
Under the terms of the loan guarantee agreement, 38 Studios promised to bring to Rhode Island a total of 450 jobs over three years. An outside monitor was to follow the company's progress.
Under legislation passed in 2010, the General Assembly created a program giving the economic development agency the authority to back up to $125 million in loans to businesses promising to create permanent, full-time jobs.
The loans would come from lending institutions, not the state, but Rhode Island would agree to repay the lender if a company defaulted.
The corporation issued bonds in 2010 and set aside the proceeds of the bond sale for 38 Studios to tap when the company met financial milestones.
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Associated Press writer Laura Crimaldi contributed to this report.
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