EDC closes on $75M Curt Schilling loan

PROVIDENCE, R.I. (WPRI) - The 38 Studios agreement is officially a done deal.

The R.I. Economic Development Corporation said Wednesday it has finished selling $75 million worth of bonds to private investors on behalf of the video game company founded by former Red Sox pitcher Curt Schilling.

The bonds were sold with three maturities, with interest rates of 6 percent for the tranche owed in 2015, 6.75 percent for 2016 and 7.75 percent for 2020, the EDC said. The buyers included insurance companies, asset managers, money managers and a community bank.

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Now that the transaction has closed, 38 Studios will receive its first distribution of money from the loan - $13 million. The rest will be handed over to the company as it meets various benchmarks.

The money will be used to fund 38 Studios' relocation from Maynard, Mass., to Providence and the development of one of its two game candidates, "Project Copernicus," a massive multiplayer online game along the lines of "World of Warcraft."

In return, 38 Studios has promised to employ 450 people in Rhode Island by late 2013 and pay back the loan over a 10-year period. If the company doesn't have the cash to cover its payments, the governor is required to ask for taxpayer money to make investors whole.

News of the deal's completion comes the morning after Rhode Islanders elected independent Lincoln Chafee, a vociferous opponent of the 38 Studios deal, to succeed Donald Carcieri as the state's next governor.

Chafee raised eyebrows in recent weeks when he threatened to sue Carcieri, who has strongly backed the deal, and members of the EDC's board should he find they failed in their fiduciary responsibility by approving the $75 million transaction.

On Wednesday, however, Chafee said he was resigned to the fact that the deal was finished. "Now that it has closed, I will do everything in my power to protect the interests of the taxpayers of our state," he said in a statement.

"We wish 38 Studios the greatest success, while vigilantly protecting taxpayer interests," he added.

Autorization for the loan was included in a new $125 million program the General Assembly created last spring, and EDC Executive Director Keith Stokes has said legislative leaders knew some of the money would be used for 38 Studios when they voted for it.

The EDC board voted to approve the deal in late July, and state officials had originally said they hoped it would be completed by Aug. 31. The bonds were sold by Barclays and Wells Fargo.

State officials have said they hope that bringing the company here will eventually lead to the establishment of a thriving gaming industry in the Providence area.

38 Studios' first game, "Kingdoms of Amalur: Reckoning," is being developed by its Maryland-based subsidiary Big Huge Games. Electronic Arts is scheduled to release the $60 game next September for Playstation 3, Xbox 360 and PCs.

Schilling has high hopes for 38 Studios. “I want to be the number one leading game publisher in the world," he told a gaming website last month. "Whether that happens two years or 10 years from now, that’s the goal.”

tnesi@wpri.com