Money pulled from 38 Studiosâ?? controversial swap

Money pulled from 38 Studiosâ?? controversial swap

By Rob Crossley

September 9th 2010 at 12:38PM

Rhode Island hedges bets with $24m loan pay transferred to a special debt reserve

38 Studios had 75 million reasons to relocate its growing studio from Massachusetts to Rhode Island. Now, after an eleventh hour policy change, it is left with 51 million.

The start-up studio was initially promised a multi-project-funding $75 million loan if it moved its studio to Rhode Island – the quid pro quo being an estimated 450 new jobs created in the area.

Now, after widespread criticism that the Rhode Island Economic Development Corporation is making an exorbitant risk it can’t afford, the body will now slice off $24 million to pay bankers fees and set up a special reserve.

Regional news outlet WRPI says nearly $20 million of that cut will be held in reserve to pay off the debt, as 38 Studios is given 15 months to meet various milestones to set in train repayment procedures.

If 38 Studios hits its targets it will be granted some $13 million from the reserve pot, reports say.

The developer’s proposed move to Rhode Island has been criticised by individuals in both Massachusetts and Rhode Island.

One neighboring developer recently made an impassioned public plea for the want-away studio to stay put.

William Reed, the CEO of Demiurge Studios, told Schilling in an open letter that such a move “will be a loss for the Boston game community”.

He said: “You will soon realise that although the capital you have secured will fund your endeavors, the most vital and necessary component to completing your project is the vast pool of talent and resources you are leaving behind”.