Political News - Rhode Island - onPolitix

38 Studios may miss out on tax credits

2012-05-24T00:36:42Z

PROVIDENCE, R.I. (WPRI) - Curt Schilling's embattled video game company 38 Studios LLC could be ineligible for millions of dollars in state tax credits that it desperately needs because the firm isn't incorporated in Rhode Island.

38 Studios is a limited liability company organized under Delaware law, according to records at the secretary of state's office reviewed by WPRI.com. The company did register its business in Rhode Island in September 2010, but did so as an out-of-state LLC.

Rhode Island's tax credit law explicitly states that productions are only eligible to receive credits if the business in question is "formed under the laws of the state of Rhode Island."

Christine Hunsinger , a spokeswoman for Governor Chafee , said the state is aware that 38 Studios' corporate residency is in question. "That is information that is part of the due diligence [for its tax-credit application], so those questions will be and are being asked," she told WPRI.com on Wednesday, declining to say more.

Nesi's Notes: Full coverage of 38 Studios PDF: EDC fact sheet on 38 Studios Timeline: How the 38 Studios deal unfolded

38 Studios is in a race to stave off insolvency and is seeking more than $8 million from Rhode Island's film-and-television tax credit program as soon as possible; it could sell those to raise badly needed cash.

At a press conference Wednesday, Chafee characterized 38 Studios' first game, "Kingdoms of Amalur : Reckoning" - which was developed at its Maryland studio and released in February - as a "flop." That quickly led Schilling to hit back at the governor on Facebook.

"I wanted to clear up some misinformation around 38 Studios first product, Reckoning," he wrote around 9:20 p.m. "Sales of Reckoning OUTPERFORMED EA’s expectations and sold more than 1.2 million units in the game’s first 90 days in the market." The NPD Group says 460,000 units have sold in North America.

Failing the eligibility test for the tax credits would be another blow to 38 Studios, which has been unable to attract private investors and has not responded to requests for comment. Asked about the situation on Wednesday, Chafee told reporters: "You can read the law governing film tax credits."

No 'RI entity' as of March

A disclosure notice 38 Studios sent to bondholders on March 15 lists only two incorporations, both in Delaware: 38 Studios LLC, the parent company, and 38 Studios Baltimore LLC, the former Big Huge Games studio it bought from THQ in 2009 that developed "Reckoning."

38 Studios "is exploring the possibility of converting to a 'C' corporation ... pursuant to the applicable laws of the State of Delaware, and other state and federal laws," the company wrote just two months ago in the disclosure notice. "The company is also exploring the possibility of establishing a Rhode Island entity."

There's no evidence that since March 38 Studios has formed a separate subsidiary organized under Rhode Island law that would be eligible for state tax credits.

38 Studios' Rhode Island registration lists its principal office as that of National Registered Agents Inc. in Dover, Del. Other big businesses based in Rhode Island, such as CVS Caremark and Textron, list their actual headquarters' address as their principal offices. 38 Studios does list One Empire Plaza as its mailing address.

Steven Feinberg, executive director of the R.I. Film & Television Office, told WPRI.com he has never approved any tax credits for 38 Studios and said "at this time" he can't discuss whether the company is eligible. The R.I. Economic Development Corporation, which lured 38 Studios to Rhode Island with a $75 million loan guarantee, directed questions to the governor's office.

'Not looking for tax credits'

38 Studios' sudden bid for tax credits marks an about-face by Schilling, the former Red Sox ace who founded the company in 2006. In March 2010, as he began relocation talks with Rhode Island, the ex-pitcher wrote on his blog: "Contrary to written reports I've never said or will say 'give us tax credits or we bolt.'"

Schilling subsequently reiterated his lack of interest in tax credits in a radio interview in July 2010, the same week the loan guarantee was approved. "Unbeknownst to a lot of people, we’re not looking for tax credits," he told WEEI. "Tax credits are an endgame play. ... Tax credits for us are not - they were never, ever something we were after."

Schilling's change of heart on the matter has dismayed Chafee, who suggested last week 38 Studios is trying to double-dip by using state loan money to fund work which makes it eligible for state tax credits. The governor has asked lawmakers to change the law so 38 Studios would be unable to do that next year.

Michael Corso, a lawyer in Providence who brokers tax-credit transactions, played a key role in the 38 Studios deal. Schilling and 38 Studios director Tom Zaccagnino met with then-EDC executive director Keith Stokes and House Speaker Gordon Fox at Corso's office in March 2010 to discuss the potential agreement, according to The Providence Journal.

Corso could not be reached for comment after business hours on Wednesday.

Separately, two of 38 Studios’ top executives have apparently left the struggling company. CEO Jen MacLean and John Blakely, senior vice president of product development, both revised their LinkedIn profiles to say that they no longer work there. Employees were seen carrying items out of its Providence building on Wednesday.

"The shakiness of this company is a tragedy for Rhode Island," Chafee said.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Fighting law that gave 38 Studios $75M

2012-05-23T01:36:59Z

PROVIDENCE, R.I. (WPRI) - The initial debate on the measure that would eventually allow the $75 million loan guarantee to Curt Schilling's video game company began back in April 2010.

Rep. Robert Watson, (R) East Greenwich, tells Target 12 that back then, some of his colleagues knew that the 38 Studios deal was already being discussed.

span style="text-decoration: underline">Web extra: Watson's heated plea to House /span> PDF: EDC fact sheet on 38 Studios Timeline: How the 38 Studios deal unfolded

"There were members in that room that were aware of the Schilling proposal and the reasons why the loan guarantee bill went from $50 million to $125 million - the rank and file, myself - we were not aware of it," Watson stated.

Watson is asking questions about the size of the 38 Studios loan guarantee. Target 12 has found out that the Economic Development Corporation has provided two other loan guarantees under the same program ; one for $1.5 million to NuLabel Technologies in Providence and another for $4 million to The Corporate Market Place in North Kingstown.

"Most rank and file members anticipated there would be smaller loan guarantees and nothing of the magnitude of the $75 million."

Watson wants to know why it was all so rushed.

"It was too fast, too loose, and a scandal waiting to happen with sketchy details and very little oversight being spelled out."

Target 12 reached out to EDC board members to ask why one company would qualify to get 60 percent of the money available, but so far, no one has commented.

Woonsocket 13% tax hike clears hurdle

2012-05-22T19:59:34Z

PROVIDENCE, R.I. (WPRI) - Rhode Island's House Finance Committee Tuesday approved legislation that would authorize Woonsocket to levy an additional 13% tax on property and motor vehicles this year.

The committee passed the bill by a vote of two to 12.

If approved, the supplemental tax would raise up to $6.6 million for the city.

Mayor Leo Fontaine has told Eyewitness News that the supplemental tax increase is necessary. The school department is currently operating with a $10 million deficit.

The bill is sponsored by Senate Finance Committee Chairman Daniel Da Ponte. It passed the Senate May 3.

The hearing will be televised live by Capitol Television, which can be seen on Channel 15 by Cox and Full Channel subscribers and on Channel 34 by Verizon viewers.

Schilling rallies 38's team on Facebook

2012-05-22T19:46:46Z

PROVIDENCE, R.I. (WPRI) - Curt Schilling won't talk to reporters about 38 Studios' situation, but he's once again sharing his thoughts on Facebook.

"The 38 team has shown breathtaking resilience through these incredibly challenging times," Schilling wrote in a new post on his Facebook wall just after 3 p.m. Tuesday.

"Helping each other with their daily lives, coming together like only a family would truly do," he continued. "Their efforts to assist each other have been something beyond explanation and defying anything that could be called a 'job.'"

"They are strong and resolute, and determined to stand together as hard and as long as they can," Schilling concluded. "For this I thank them all, I am so proud of this team." At least seven 38 Studios employees clicked "like" on the message by their founder and chairman within 45 minutes.

Nesi's Notes: Full coverage of 38 Studios PDF: EDC fact sheet on 38 Studios Timeline: How the 38 Studios deal unfolded

Schilling's comments come the same afternoon Turbine Inc., a Boston-based game developer, is set to hold a recruitment event in Providence. 38 Studios was unable to pay its employees last week and Governor Chafee said Monday the company has been forced to lay off some workers.

A new Facebook group called "We Support 38 Studios" was created on Sunday, and had 257 "likes" as of Tuesday afternoon. A number of people left messages on the group's page saying they were concerned family members of 38 Studios employees.

Schilling moved 38 Studios to Providence from Massachusetts last year in return for a $75 million taxpayer-guaranteed loan from the R.I. Economic Development Corporation. The company is now fighting to survive after spending its entire $49.8 million share of the loan proceeds, according to state officials.

Schilling briefed members of the EDC board last Wednesday and again on Monday night, but the board took no action and refused to say what assistance the company is seeking. Schilling left without taking questions from reporters on Monday night.

Spokeswomen for Chafee and the EDC both said Tuesday there have been no developments regarding 38 Studios. "Project Copernicus," the game 38 Studios is developing with the taxpayer-guaranteed loan money, is not slated for release until June 2013. The firm is spending more than $4 million a month, Chafee said.

Another game developer, Avalanche Studios of Sweden, said Tuesday it will hold its own recruitment event in Providence later this week at the Westin Hotel. Neither Turbine nor Avalanche mentioned 38 Studios' turmoil directly in their announcements.

38 Studios employed 379 full-time workers as of March 15, with 288 of them in Providence and the rest at its other studio in Maryland, according to a disclosure notice sent to bondholders. The company also reported 34 full-time contractors and eight interns. The company listed 18 job openings on its website as of Tuesday.

Employees outside 38 Studios' headquarters on Empire Street have declined to comment on the events.

Separately, Electronic Arts division BioWare disclosed Tuesday that it is laying off employees at its Austin office who are working on "Star Wars: The Old Republic," which is a massively multiplayer online game like 38 Studios' forthcoming "Copernicus."

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Gov. Chafee confirms 38 Studios layoffs

2012-05-21T14:42:47Z

PROVIDENCE, R.I. (WPRI) - Rhode Island Governor Lincoln Chafee has confirmed for Eyewitness News that 38 Studios is laying off employees.

It's unclear at this time how many people the taxpayer-backed video game company will be letting go.

On Monday night, the Rhode Island Economic Development Corporation's Board of Directors met with Curt Schilling to discuss the latest developments involving the state's deal with 38 Studios.

Eyewitness News has learned that Schilling was not in the open session of the meeting, instead he went immediately into the executive session with Gov. Lincoln Chafee and EDC board members.

It's still unclear whether or not the video gaming company has made payroll.

"Payroll? We're not sure. We are going to hear more from them here," Chafee said outside EDC headquarters in Providence.

Last week, state leaders began expressing concerns about the firm's financial situation, after 38 Studios defaulted on a $1.125 million payment to the EDC.

Nesi's Notes: Full Coverage of 38 Studios PDF: EDC Fact Sheet on 38 Studios Timeline: How 38 Studios Deal Unfolded

Schilling's company eventually made the overdue payment on Friday.

38 Studios was lured from Massachusetts to Rhode Island in 2010 after the Rhode Island EDC offered a $75 million loan guarantee.

Gov's son pleads no contest to charges

2012-05-18T18:38:09Z

JAMESTOWN, R.I. (AP/WPRI) - The 18-year-old son of Gov. Lincoln Chafee has pleaded no contest to accusations he tried to buy beer at a liquor store last month.

According to court officials, Caleb entered the plea Friday. He was charged with being a person under 21 entering an establishment to buy alcohol.

Related : Gov. Chafee's son charged in Jamestown

According to a police report first obtained by Eyewitness News, video from a surveillance camera at Jamestown Wine and Spirits on Southwest Ave. shows Caleb Chafee walk up and put two cases of beer on the counter.

Extra: Read the Jamestown P.D. Police Report

Police said Chafee then got a phone call, told the clerk he had no money and said he'd be back. At that point, the report states Chafee got into the front seat of a blue BMW, which drove away from the store.

Police pulled the car over a short time later.

Chafee: No more tax money to 38 Studios

2012-05-18T17:26:23Z

PROVIDENCE, R.I. (WPRI) - Governor Chafee said Friday he opposes further taxpayer assistance for 38 Studios other than tax credits that are already available, saying Curt Schilling's troubled video game company has gotten enough state aid and will need to turn to private investors to solve its cash crunch.

Also Friday, 38 Studios made an overdue $1.125 million payment to the R.I. Economic Development Corporation, one day after its chief financial officer tried to hand deliver a check to the agency that he acknowledged would bounce. The company wired $1.025 million and gave a check for the other $100,000 on Friday, Chafee said.

38 Studios officials told the EDC it would be able to make the payment as recently as April 27, Chafee said. "I think things were going well up until then," he said. Keith Stokes, who worked with former Governor Carcieri to push through the 38 Studios deal in 2010, resigned on Wednesday night.

Nesi: RI taxpayers on hook for $ 112.6M PDF: New EDC fact sheet on 38 Studios Nesi's Notes: Full coverage of 38 Studios

The governor, flanked by David Sullivan from the Division of Taxation and Rosemary Booth Gallogly from the Department of Revenue, gave a briefing during a packed hour-long news conference Friday afternoon at the State House, five days after the 38 Studios saga exploded into a public crisis.

Nearly $50 million gone now

The gaming company, which relocated to Providence from Massachusetts last year in return for a $75 million taxpayer-guaranteed loan, has so far received $49.8 million of the loan proceeds, with the rest set aside as a reserve to pay off bondholders. 38 Studios says it's blown through the entire $49.8 million, Gallogly said.

Rhode Island taxpayers could be asked to pony up money to pay back the bondholders on 38 Studios' behalf as soon as next year. If the company is unable to make a $12.8 million loan payment next May the EDC will have to tap a reserve account; if that happens, Chafee is required to ask lawmakers to replenish the account.

38 Studios released its first game - "Kingdoms of Amalur : Reckoning" - in February to solid reviews and sales. But Rhode Island is funding its second game - tentatively named "Project Copernicus" - and Chafee said that game's release date has now been pushed back from September 2012 to June 2013, more than a year from now.

Late Friday, 38 Studios released a two-minute video previewing Amalur, the setting for "Copernicus."

The company has told state officials its operating costs are running at more than $4 million a month. The company employed 379 full-time employees as of March 15, including 288 in Rhode Island, according to bond documents obtained by WPRI.com. Workers at its Empire Street headquarters on Friday declined to comment.

Schilling wants tax credits

Chafee's attention quickly turned to Rhode Island's film-and-television-production tax credit program, which also covers video game companies, and indirectly could provide 38 Studios with some badly needed cash after it failed to pay its employees this week.

38 Studios has applied for roughly $8.7 million in tax credits based on its expenses last year and wants to sell those to another firm, which could use them to offset its own tax bill. The company initially sought $2.2 million but filed a new application Friday for $6.5 million more. The new application is now being reviewed.

Chafee said he told Schilling and other 38 Studios executives the company needs to raise money from the private sector to keep its doors open because Rhode Island taxpayers have already give the firm "a very good deal." But it's unclear whether there is an appetite among investors to put additional money into the company.

"Basically," Chafee said, 38 Studios' problem is that "access to private capital hasn't materialized." He declined to say how much more money the company estimates it will need between now and the middle of next year to develop and release "Copernicus." The first game was made at a studio in Maryland 38 Studios bought in 2009.

RI risked 'huge investment'

The governor said he has pushed back throughout the week against proposals to give more state assistance to 38 Studios. "It's a balance of making sure 38 Studios is successful so we can recoup our huge investment, and also not getting further exposed," he said.

A document the governor's office released said 38 Studios has applied for another $12 million in film tax credits for 2012. Chafee on Friday proposed changing the tax credit rules, saying firms getting taxpayer loans shouldn't be able to also get tax credits. "The basic problem is using state money to access state money," he said.

38 Studios was ineligible to receive the tax credits until it got out of default status by making the $1.125 million payment. Sullivan said the EDC has hired the consulting firm Braver to conduct an independent audit of 38 Studios' finances to determine whether it's actually spent the entire $49.8 million, making it eligible for the credits.

Schiling, who has refused to answer questions from reporters, appealed to the EDC board for more assistance at an emergency meeting held Wednesday. "I was very apprehensive about what might happen at that meeting," Chafee said. The board took no action Wednesday and is scheduled to meet again on Monday afternoon.

No 'vindication' for Chafee

Chafee, who opposed the 38 Studios deal as a gubernatorial candidate in 2010, said his main goal moving forward is to look out for taxpayers' best interests. "I'll do anything under the law to protect the taxpayer and also not break the law," he said. "My goal is to protect the taxpayer now." He added: "We're in deep."

"I don't feel any vindication," Chafee said later. "I just want to get the economy going, get our people back to work, save our cities and towns." Carcieri has not contacted Chafee to discuss the problems with the loan deal the previous governor approved over his successor's opposition.

Executives at Providence Equity Partners, the powerful private-equity firm based in Rhode Island, were among those who warned Chafee about the difficulty of succeeding in the game industry. The governor suggested Schilling has been reluctant to allow others to take an equity stake in 38 Studios in return for more money.

"The outside experts who know this industry said the only time you get involved is if you're going to have an equity stake," Chafee said. The 2010 deal with 38 Studios negotiated by Carcieri and Stokes didn't give Rhode Island taxpayers such an equity stake in the firm.

Asked whether Rhode Island would ever do a 38 Studios-style deal again, Chafee replied: "Never, never - not on my watch. I said from the beginning it was a risky enterprise." Gallogly said she's briefed the three major agencies that set Rhode Island's bond rating about the situation and plans to keep them apprised.

Kane not getting EDC job

Chafee said he hasn't given significant thought yet to finding a replacement for Stokes, the EDC leader who resigned Wednesday. Colin Kane, chairman of the I-195 Commission, was never formally offered the job and the governor said he only broached the possibility of Kane taking over on an interim basis in a conversation.

William Parsons, the EDC's managing director of business and community development, is overseeing the agency's day-to-day operations at the moment. Chafee said he doesn't want to abolish the EDC but does want to put together "a good supportive team that concentrates on growing the companies that are here already."

The latest developments on 38 Studios come the same day the U.S. Labor Department reported Rhode Island's unemployment rate rose to 11.2% in April, the second-highest in the country after Nevada. The jobless rate fell to 6.3% in Massachusetts, which turned down Schilling's request for backing before he got help from Rhode Island.

Schilling took to Facebook overnight and posted a brief message thanking his supporters. "To all the prayers and well wishes to the team and families at 38, God Bless and thank you!" he wrote. "We will find a way, and the strength, to endure." Schilling also said it's "not true" that he's been paid back for his investments in 38 Studios.

38 Studios has also removed a list with the names of its board of directors from its website without explanation. Asked whether he's satisfied by the company's communication with state officials, Chafee said: "That's always an issue."

Chafee did say he's "buried the hatchet" with Schilling personally after mocking the ex-pitcher's famous "bloody sock" during the 2010 campaign. The governor said he visited 38 Studios in Providence after taking office.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

Tim White contributed to this report.

Concerns about Schilling's 38 Studios

2012-05-18T16:17:24Z

PROVIDENCE, R.I. (WPRI) – The situation at 38 Studios is raising alarm bells at the State House.

While details remain sketchy, reports began emerging late Monday that the governor’s staff has been meeting for days with the video game company, founded by former Red Sox ace Curt Schilling. Sources told WPRI.com red flags have been raised about its finances but they declined to provide details on the record.

“We’re concerned and just doing everything possible to ensure that 38 Studios stays part of the Rhode Island community,” Governor Chafee told WPRI.com Monday night. “We’re working on different issues with them.”

Asked whether he thinks 38 Studios can be stabilized, Chafee paused and said: “We’re working on it.”

The R.I. Economic Development Corporation gave 38 Studios a $75 million taxpayer-backed loan in 2010 with the strong backing of EDC Executive Director Keith Stokes and then-Governor Donald Carcieri. In exchange the company moved its headquarters from Massachusetts to Providence in April 2011 and pledged to employ 450 here.

38 Studios had received $49.8 million in cash from the loan as of March 15, according to a disclosure notice the company sent to bondholders that was obtained by WPRI.com. Another $23.4 million was put into a Capital Reserve Fund and a Capitalized Interest Account, with the rest used to pay for floating the bonds.

It’s not the first time concerns have been raised about 38 Studios’ finances.

‘Substantial doubt’ about company

Last June, PricewaterhouseCoopers audited 38 Studios and issued a “going concern” opinion that expressed “substantial doubt” about whether the company would be able to stay solvent, the disclosure filing said.

38 Studios released its first game – “Kingdoms of Amalur: Reckoning” – in February to positive reviews and decent sales. But the taxpayer-backed loan is actually funding its other project - “Project Copernicus,” a massively multiplayer online game that was first targeted at a September release but has remained under wraps.

The questions about whether “Copernicus” remains on track – and whether Rhode Island’s investment is secure – grew in recent days after 38 Studios was removed from the list of companies scheduled to present at next month’s Electronic Entertainment Expo in Los Angeles, one of the gaming industry’s biggest events of the year. The EDC hired IBM in 2010 to provide ongoing third-party monitoring of 38 Studios’ progress.

A spokesman for 38 Studios was not immediately available for comment. EDC board member George Nee said he has heard there are problems but has not been briefed on them. EDC spokeswoman Judy Chong told WPRI.com: “I do not have information for you at this time.” Treasurer Raimondo’s office is not involved in the deal.

288 employees in Rhode Island

The disclosure notice said 38 Studios said employed 379 full-time workers as of March 15, with 288 of them in Providence and the rest at its other studio in Maryland. The company also reported 34 full-time contractors and eight interns. The company listed 18 job openings on its website as of Monday evening.

“Together, these studios are developing an original fantasy story that takes place in a vast world over thousands of years,” the company told bondholders in the disclosure filing.

It’s unclear whether rank-and-file employees at the company are aware of its financial problems. The company has never held a ribbon-cutting ceremony at its new One Empire Plaza headquarters in Providence, though Mayor Angel Taveras visited the firm.

“It’s always been a volatile industry to be in,” Chafee, who opposed the deal as a candidate for governor, told WPRI.com. “That’s just the risk you take when you get into the business.” A third-party monitor was supposed to keep the tables on the company’s progress.

Schilling is paid back

Wells Fargo and Barclays borrowed the $75 million for the EDC and 38 Studios by selling three tranches of bonds on Nov. 2, 2010, to a group of investors that included insurance companies, asset managers, money managers and a community bank, according to the agency.

The $23.685 million first bond tranche matures in 2015 at a 6% interest rate; the $8.86 million second bond tranche matures in 2016 at a 6.75% interest rate; and the $42.455 million third bond tranche matures in 2020 at a 7.75% interest rate. Biannual interest payments are due on May 1 and Nov. 1 until the bonds are paid off.

In July 2010, the same month the EDC approved the loan guarantee, 38 Studios established a revolving line of credit secured by Schilling so it could borrow up to $4 million from him, according to the disclosure filing obtained by WPRI.com. Part of the taxpayer-guaranteed loan money was used to pay the line of credit back.

R.A. Salvatore, a fantasy writer who helped develop the games, is slated to receive $1.46 million from 38 Studios in October under the terms of a consulting agreement he signed with the company in 2007. He is also eligible to earn up to $5 million in royalties from sales of “Reckoning” and other 38 Studios products.

The General Assembly increased the size of the Job Creation Guaranty Program from $50 million to $125 million in early 2010 after Schilling approached the state. A WPRI 12 poll later that year showed 54% of Rhode Island voters opposed the $75 million loan guarantee to 38 Studios, with just 28% in favor of the deal.

Schilling, who is an ESPN analyst as well as 38 Studios’ chairman, founded the company in August 2006.

Ted Nesi ( tnesi@wpri.com ) covers politics and the economy for WPRI.com and writes the Nesi's Notes blog. Follow him on Twitter: @tednesi

An earlier version of this story said 38 Studios established the line of credit in 2010 with Schilling; the line of credit was established with a bank and secured by Schilling.

Schilling: 'We will find a way'

2012-05-18T15:55:49Z

PROVIDENCE, R.I. (WPRI) -- Amid the controversy surrounding his Providence-based video game company, Curt Schilling has sent a message to his supporters.

Schilling's company, 38 Studios, was not able to pay its employees yesterday, and the EDC returned a promised $1.125 million check to the company after they learned it would bounce due to insufficient funds.

Schilling posted on his Facebook page at about midnight Thursday: "To all the prayers and well wishes to the team and families at 38, God Bless and thank you! We will find a way, and the strength, to endure."

The company received a $75 million loan guarantee from the state in 2010, though Rhode Island taxpayers are not on the hook at this point. The EDC broke down the deal, saying that the company has received $52 million of the $75 million in privately-funded municipal bond money, and the rest is in a pair of reserve accounts, unavailable to the company.

The EDC plans to meet again to Monday to discuss the fate of 38 Studios. No word if any action will be taken at that meeting.

RI taypayers not on the hook yet

2012-05-17T21:49:30Z

PROVIDENCE (WPRI) - While 38 Studios has injected an estimated $17 million in payroll and benefits into Rhode Island’s economy over the past year, Rhode Island taxpayers have not paid a dime to Curt Schilling's company, yet.

The Economic Development Corporation broke down the dollars aimed at 38 Studios and told Target 12, the company has received just under $48 million in privately funded municipal bond money. About $23 million of the $75 million from the state's loan guarantee program is held in a pair of reserve accounts. That money is not available to the company. The rest of the money paid fees that included bond insurance.

"Principal and interest will be paid out of the capital reserve funds until 2014," EDC spokesperson Judy Chong said.

Chong said if 38 Studios cannot make its payments in the future, a request for taxpayer money would then be made to the General Assembly, starting in 2014 to pay off the privately funded bonds and interest by 2020. Chong added that the company's present and future rights, title and interest in any projects, trademarks, patents and copyrights are among the collateral required for the loan guarantee agreement.

38 Studios is required to report its internal income statements, balance sheets and its number of full time employees to the EDC. The income statements and balance sheets are not available to the public.

On the jobs front, as of 38 Studio's last report, 251 were employed with salaries and benefits that average $67,500 per employee. Chong said there are about 25 additional positions that pay less than that. The total payroll amount is not required to be reported. Under its agreement, the company was supposed to employ 300 full time employees by this October and 450 by next October.

38 Studios first game, Kingdom of Amalur, Reckoning was made in Maryland, released in February and had reportedly sold 460 thousand copies through April.

Right now, the company is working on two projects at its 1 Empire Plaza location in Providence.

Target 12 found out Schilling's loan guarantee is one of three the EDC has made through the $125 million program that was approved by the General Assembly in 2010.

NuLabel Technologies in Providence and The Corporate Market Place in North Kingstown are the other two.