NEW: RISC Opposes Any Bailout for 38 Studios
Tuesday, May 15, 2012
The Rhode Island Statewide Coalition (RISC) is demanding that the General Assembly reject a request for additional taxpayer-subsidized financial assistance to the faltering 38 Studios company in the wake of news reports indicating the company is not going to be able to meet scheduled payment obligations on a $ 75 million dollar loan that are approaching in the coming year and that taxpayers could ultimately end up on the hook for over $112 million.
Approximately $12.7 million in principal and interest payments on that loan start coming due in 2013 and all indications are that 38 Studios will not be able to meet those obligations. (Though the EDC asserts the company has met an interest payment due this month, interest payments are being drawn from a $20 million dollar reserve fund set aside from the original loan package.)
“There should be no RI taxpayer bail-out of what could be emerging as a colossal financial misadventure,” said RISC Executive Director Donna Perry. “We are urging that leadership of the General Assembly reject any proposals by the EDC and the Governor to find yet new sources of taxpayer funds to prop up 38 Studios. Furthermore, why didn’t the EDC raise red flags a year ago when it apparently was reported in an audit that the company was not on track to meet the obligations of the loan? Taxpayers deserve answers at this point from the EDC about how long it has known 38 Studios was in trouble.”
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