38 Studios Missed First Loan Repayment

More details have been emerging in the situation regarding Kingdoms of Amalur developer 38 Studios. It was revealed this week that the studio has met with the governor and officials from the State of Rhode Island over a $75 million economic development loan they secured in 2010. Their first payment of $1.125 million was scheduled for May 1, and is past due, it turns out—probably what spurred the meeting in the first place. And because of the fun nature of loans, interest, and repayment, if 38 Studios can’t manage to make good on what they borrowed, taxpayers in the State of Rhode Island will be footing a bill for $112.6 million that the studio was supposed to pay off by 2020.

About an hour ago, though, the Associated Press filed a story revealing that Curt Schilling, former MLB pitcher and founder of 38 Studios, is asking the state for even more financial assistance—though how much isn’t yet clear.

Said Rhode Island Governor Lincoln Chaffee with regard to the request: “How do we avoid throwing good money after bad?”

After Schilling met with Gov. Chaffee and members of the Rhode Island Economic Development Corporation yesterday morning, he refused to answer questions from reporters, saying, “My priority right now is to get back to my team.”

As of now, no official action’s been taken by the EDC, who have their next meeting on Monday. The EDC did, however, release this statement today:

“The RIEDC Board of Directors met in closed session to receive a presentation from representatives of 38 Studios as to the company’s confidential financial status and projections. Members of the Board asked many probing questions of the company. After representatives from 38 Studios concluded their presentation, the Board then engaged in extended discussion of confidential financial information. The Board did not take any vote. The company still has the option to cure the existing default by paying the $1,125,000 guaranty fee that is past due. In the meantime, we will continue to talk with 38 Studios and develop additional information, and will resume the Board meeting at our regularly scheduled meeting on May 21. The members of the Board may not discuss the confidential information received and discussed today.”

This is all some interesting—and troubling—stuff. Due to the fact that 38 Studios was unable to make even their first payment, that spells trouble. This situation also echoes news from March, in which it was revealed that Canadian studio Silicon Knights had a dispute with the Ontario Government over $3 million in public funding that was never awarded to the developer, despite the public announcement that it would be.

When questioned about why the government didn’t deliver the funds, we were told that Silicon Knights hadn’t fulfilled one or more of the agreement’s pre-requisites, while Silicon Knights claimed they had. What were those pre-requisites? Totally unknown, as opposed to a full-on fact sheet that was released today about 38 Studios’ situation. But in the end, $3 million never delivered is much, much less than $75 million that was paid…and seemingly spent.

We’ll have more on the situation as it unfolds. In the meantime, buy some extra copies of Kingdoms of Amalur. Like, LOTS OF THEM.

AP and WPRI, via Joystiq