politics

Chafee issues statement on 38 Studios deal; says he will monitor the EDC

PBN FILE PHOTO / FRANK MULLIN
LINCOLN CHAFEE ISSUED A STATEMENT late Wednesday expressing his disappointment over the R.I. EDC's closing of a bond for 38 Studios.
Posted 11/4/10

PROVIDENCE – Lincoln Chafee, Rhode Island governor-elect, issued a statement late Wednesday expressing his disappointment over the closing of R.I. Economic Development Corporation's $75 million bond deal for Curt Schilling’s 38 Studios LLC.

“I would have preferred that the EDC honor my request to defer the closing so that I would have had a chance to formally contribute to the process,” Chafee said. “Now that it has closed, I will do everything in my power to protect the interests of the taxpayers of our state.”

“I will continue to carefully monitor further steps taken by the EDC. It is my intent to ensure that the state fulfills any and all of the commitments made by the EDC. I will, however, ensure that 38 Studios fully and completely comply with each and every commitment that it has made to the taxpayers of Rhode Island,” he said.

“Too often in the past we have failed to monitor economic development deals to ensure that commitments be kept," said Chafee, adding: "That will not be the case here. We wish 38 Studios the greatest success, while vigilantly protecting taxpayer interests.”

The EDC says the move by the gaming company will create 450 jobs and spark the creation of a video-gaming industry in the state.

The bond sale was announced early Wednesday and Chafee issued his formal statement later that afternoon.

A Chafee aide told Providence Business News soon after the announcement was made that the governor-elect was “very disappointed.”

“[Chafee’s] position all along was that this was a bad deal for the Rhode Island taxpayer. He consistently asked the EDC and the current administration to delay closing the deal until the next governor was inaugurated,” said Mike Trainor, a Chafee aide and former campaign manager.

The EDC said that Wells Fargo Securities Capital and Barclays co-underwrote the bonds, which were purchased in a private placement Tuesday by a group of investors that included insurance companies, asset managers, money managers and a community bank. The bonds were sold at three maturities, with rates of 6 percent for 2015, 6.75 percent for 2016 and 7.75 percent for 2020.

The EDC said 38 Studios would immediately receive $13 million, with the rest of the money coming during the next 15 months as the company reaches certain milestones such as employment targets. The EDC will also set aside $20 million to cover debt payments during the first three years if 38 Studios defaults.

The gaming company, which has yet to release a product, will receive the money from the state’s $125 million Rhode Island Loan Guaranty Fund.

The company announced in September it planned to move into offices at One Empire Plaza, a building once owned and occupied by Blue Cross & Blue Shield of Rhode Island.

4 comments on this story | Add your comment
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DeanLevi

Who is going to monitor Chafee? The unions or Obama? Will he destroy RI financially as fast as his endorser destroyed the US? God, please help us.

Thursday, November 4, 2010 | Report this
stevenmedeiros@mac.com

Sorry, Dean. I happen to think Obama saved this country. That's why he will get a second term. I credit him with turning 750,000 a month job losses to 150,000 jobs gained last month. I also credit him with passing healthcare which will finally make conservative leeches purchase their own health insurance rather than mooching off me. (Don't you just love their pitiful arguement that the big, bad gobmint is making them purchase a product yet have no problem using my healthcare system and expect my insurance to cover them?) And I also want to personally thank him for pushing Congress to get financial regulation moving forward so I'm not so vulnerable to big banks' failures with my money and our economy. God is helping us. He gave us Obama. It's you and your kind that nearly destroyed this country. We will never forget that.

Saturday, November 6, 2010 | Report this
mvpm123

hey steven from providence: How come the financial regulation that was passed did not reform fanny may or freddie mac? those 2 barnny frank controlled institutions have had to have millions of federal dollars pumped into them the past few months to keep them afloat. How come unemployment is over 11% here in rhode island? Yes we did get stimulus money to rebuild the infrastructure, new roads and bridges (thankyou to all those union workers who got those jobs) don't forget the $800 dollar american recovery act signs telling us where the money was spent. Of course there are no jobs to drive to. I would have rather had a tax cut so I will have more money at the end of the week to spend than this healthcare bill. Did you happen to notice how blue cross, united health and last week tuffs asked for and got rate increase approvals. we were told that if this bill was passed rates would go down.

Monday, November 8, 2010 | Report this
ecofriendly

Please explain how Obama saved anything--take the horse blinders off---you do realize the election was last week and the results are directly related to Obama and his abysmal presidency.

Obama is another Jimmy Carter 1 term ideolog. I suppose you think Nancy Pelosi was good for the country too. And Barney Frank another great american. It's time you understand it is a country of the many not that of a disjointed few.

Monday, November 8, 2010 | Report this
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