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Gov: Schilling should seek private financing to keep company afloat

CBSSports.com wire reports
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PROVIDENCE, R.I. -- Former Red Sox pitcher Curt Schilling's video game company has made an overdue $1.1 million payment to the state and now should seek out private financing to stay afloat, Rhode Island Gov. Lincoln Chafee said Friday.

"There's no more easy money," Chafee said at a Statehouse news conference.

The company, 38 Studios, missed a scheduled payment to the Rhode Island Economic Development Corp. on May 1 and told the state it could not meet its payroll this week, prompting worries about its solvency and whether the state would have to step in to pay its debts.

38 Studios hand-delivered a check to the economic agency on Thursday only to have the chief financial officer acknowledge soon after there wasn't enough money in the account to cover it.

The $1.1 million payment was made on Friday and the check cleared, Chafee said.

The governor acknowledged that the company could be eligible for millions more in tax credits under an incentive program for film companies and video game studios. The company applied for $2.1 million in credits last year, and sought more on Friday.

38 Studios was lured from Massachusetts in 2010 after Rhode Island officials offered a $75 million loan guarantee. The money was raised through a bond sale and distributed by the Rhode Island Economic Development Corp. as the company met financial and other milestones.

As of November, the company had received nearly $50 million, according to the state. Rhode Island Revenue Director Rosemary Booth Gallogly said Thursday the company has indicated that all of that money has been spent. The state is performing its own audit, she said.

Schilling asked for additional help from the state, but Chafee -- who opposed the loan guarantee as a candidate for governor -- doesn't want to lend any more financial help.

"Taxpayers have had a very generous deal for 38 Studios," he said.

Still, he said, he recognized the need to protect the already steep public investment, noting: "We're in deep."

Chafee said the company has told him that private capital has not materialized, but that the deal was for it to find private financing.

"Let's stick to it," he said.

Messages were left for Schilling and a 38 Studios spokesman.

Schilling thanked well-wishers in a Facebook post late Thursday, writing: "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."

Chafee said the company told state officials as late as April 27 that it intended to make the May 1 payment.

"Up until then, things seemed to be good," he said.

Chafee on Friday declined to characterize the company's financial health. He and the Economic Development Corp. board received a presentation from Schilling and others 38 Studios executives on the company's finances at an emergency meeting Wednesday.

The head of the economic agency has since resigned.

38 Studios on Friday submitted a new application seeking $6.5 million in film tax credits in addition to the million in credits it had been seeking. Officials are trying to determine whether the company is in full compliance with its loan guarantee agreement with the state -- and all state laws -- and therefore eligible for the credits.

Chafee on Friday proposed the General Assembly impose a $5 million cap on the amount of credits a single project can receive.

Copyright 2014 by STATS LLC and The Associated Press. Any commercial use or distribution without the express written consent of STATS LLC and The Associated Press is strictly prohibited.
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