38 Studios in serious Financial Trouble
Posted: Mon May 21, 2012 1:06 pm
The board of Rhode Island's economic development agency will meet Monday night to discuss the finances of former Red Sox pitcher Curt Schilling's troubled video gaming company, whose failure would likely force the state to step in and pay its debts as part of a $75 million loan guarantee.
Schilling last week briefed the Economic Development Corp. board on 38 Studios' finances and asked for additional help to stay afloat after missing a $1.1 million payment to the state that was due on May 1.
The board has not acted on that request, but Gov. Lincoln Chafee, the board's chairman, has said he doesn't want to provide any more assistance to the Providence-based company.
38 Studios moved to Rhode Island from Massachusetts in 2010 after the state offered a $75 million loan guarantee that officials said would mean several hundred high-paying jobs and millions in tax revenue. It has received about $50 million of that money to date, and told state officials it has spent it all.
Melissa Chambers, a spokeswoman for the economic agency, said she didn't know if the board would take action on Monday night.
The company finally made the overdue $1.1 million payment to the EDC on Friday. The company had delivered a check to the agency Thursday only to acknowledge soon after there wasn't enough money in the account to cover it. The check was returned.
State officials say 38 Studios also notified them last week the company would not be able to meet payroll.
Schilling has declined to comment. A message was left for him Monday.
Chafee opposed the loan guarantee deal in 2010 when he was campaigning for governor, calling it "one of the biggest risks I've ever seen." But he said Friday he recognizes the need to protect the already steep public investment.
"We're in deep," he said.
Keith Stokes, the executive director of the Economic Development Corp., resigned last week. One member of the EDC board voted against the loan guarantee in 2010.
Copyright 2012 by The Associated Press
Schilling last week briefed the Economic Development Corp. board on 38 Studios' finances and asked for additional help to stay afloat after missing a $1.1 million payment to the state that was due on May 1.
The board has not acted on that request, but Gov. Lincoln Chafee, the board's chairman, has said he doesn't want to provide any more assistance to the Providence-based company.
38 Studios moved to Rhode Island from Massachusetts in 2010 after the state offered a $75 million loan guarantee that officials said would mean several hundred high-paying jobs and millions in tax revenue. It has received about $50 million of that money to date, and told state officials it has spent it all.
Melissa Chambers, a spokeswoman for the economic agency, said she didn't know if the board would take action on Monday night.
The company finally made the overdue $1.1 million payment to the EDC on Friday. The company had delivered a check to the agency Thursday only to acknowledge soon after there wasn't enough money in the account to cover it. The check was returned.
State officials say 38 Studios also notified them last week the company would not be able to meet payroll.
Schilling has declined to comment. A message was left for him Monday.
Chafee opposed the loan guarantee deal in 2010 when he was campaigning for governor, calling it "one of the biggest risks I've ever seen." But he said Friday he recognizes the need to protect the already steep public investment.
"We're in deep," he said.
Keith Stokes, the executive director of the Economic Development Corp., resigned last week. One member of the EDC board voted against the loan guarantee in 2010.
Copyright 2012 by The Associated Press