Emails show origins of 38 Studios deal, loan program

Emails from the former head of the R.I. Economic Development Corporation appear to show that without a deal with 38 Studios LLC on the horizon, the General Assembly likely would not have created a multimillion-dollar loan guarantee program, WPRI reported. More

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38 Studios

Emails show origins of 38 Studios deal, loan program

BLOOMBERG FILE PHOTO/TONY AVELAR
CURT SCHILLING'S video game company was the main reason for Rhode Island's loan guarantee program passed in 2010, according to emails released during House hearings on the 38 Studios deal.
Posted 8/8/13

PROVIDENCE – Emails from the former head of the R.I. Economic Development Corporation appear to show that without a deal with 38 Studios LLC on the horizon, the General Assembly likely would not have created a multimillion-dollar loan guarantee program, WPRI reported.

“Without the tangible prospect of a company like this coming to Rhode Island, the opportunity to create the program would likely not have materialized,” former EDC Executive Director Keith W. Stokes reportedly wrote in a July 2010 email to The Rhode Island Foundation President and CEO Neil D. Steinberg.

House leaders have said the purpose of the $125 million Job Creation Guaranty Program, passed in 2010, was to offer support to multiple businesses, not just Curt Schilling’s video game company.

Another email shows a state economic development official discussed private financing for the company a day after the $75 million loan guarantee was approved, according to an AP report published by the Columbus, Ind. Republic. Michael Saul, a former deputy director at the state's Economic Development Corp., wrote to a Bank of America executive in July 2010 about possible funding for the 38 Studios, saying that another bank was considering $25 million in financing for it.

The emails were among several hundred pages of documents related to the 38 Studios deal reviewed Wednesday during a hearing of the House Oversight Committee. The 13-member panel plans over the next year to piece together a “timeline” of how the deal for a $75 million dollar loan guarantee to the company came together, House fiscal analyst Kyle Lynch told WPRI.

The documents include emails, memos, EDC meeting minutes and presentations related to the deal. They show EDC officials working fast to reach a deal with Schilling even before the General Assembly approved the loan program.

The state has filed suit against Stokes, Schilling and other architects of the deal with 38 Studios, which filed for bankruptcy last year, in an attempt to recoup the roughly $90 million cost of covering the loan.

Oversight Committee Chairman Rep. Michael J. Marcello, D-Scituate, has said he would like key players to testify in the hearings but that it may be difficult, since the key players are all named in the suit.

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