38 Studios LLC still owes Rhode Island a $1.125 million payment. On top of that, it missed payroll.
The embattled video-game company founded by former Boston Red Sox pitcher Curt Schilling was on the verge of making its past-due payment to the Rhode Island Economic Development Corp. late Thursday afternoon, even hand-delivering a check at 5 p.m. The check, though, wouldn't clear.
"Upon learning from the chief financial officer [Rick Wester] of 38 Studios that there were insufficient funds to cover the payment, the check was returned," Gov. Lincoln Chafee's office said in a statement. "The EDC remains willing to accept readily available funds."
The company by then had told the state it missed payroll, according to Chafee’s director of communications, Christine Hunsinger. About 275 employees work in the Providence office. Bond covenants require the company to employ 450 there.
Messages seeking comment were left with 38 Studios.
The agency in 2010 provided a $75 million loan guarantee to coax Schilling, who founded the company in 2006, to move his company to downtown Providence from Maynard, Mass.
On Wednesday, Schilling’s company asked the board for more state assistance after the company missed a payment that had been due May 1. Chafee’s office, however, said the company could avoid the default by paying the $1.1 million payment, which according to bond documents is an “annual guaranty fee” equal to 1.5% of the average amount of outstanding bonds.
Keith Stokes resigned under fire late Wednesday as the EDC chairman. Chafee has offered the job to Colin Kane, now the unpaid chairman of the Route 195 Redevelopment Commission.
Chafee canceled a meeting he had scheduled earlier Thursday afternoon with state Treasurer Gina Raimondo to discuss the matter. Raimondo, at a hastily called news conference, re-emphasized her opposition to the deal.
“I don’t think that government should be in the business of venture capital. It’s a high risk business ... with this deal in particular,” Raimondo, herself a former venture capitalist, said in the Providence Journal.
“This was a startup company. They hadn’t launched a game. They didn’t have a dollar of revenue at the time that the state put the money at risk.
“The gaming industry is a very risky business. ... It’s like the rock-and-roll business. Some things hit, some things don’t, and if they don’t hit, you lose all our money.”
