Blue Cross refuses 38 Studios offer to buy R.I. tax credits [The Providence Journal, R.I.]

May 18--PROVIDENCE, R.I. -- A broker offered Blue Cross & Blue Shield of Rhode Island an opportunity to buy tax credits from Curt Schilling's struggling 38 Studios video-game company, the non-profit health insurer said Friday. But Blue Cross said it turned the offer down.

In response to an inquiry, company spokeswoman Kim Reingold issued this statement:

"Blue Cross & Blue Shield of Rhode Island was offered the opportunity to purchase tax credits from 38 Studios this past week. After conducting the necessary due diligence, BCBSRI has decided not to pursue the purchase of these tax credits."

She did not immediately respond to inquiries about who approached the company, or why the offer was rejected, but said Blue Cross has purchased film and historic tax credits in the past from from other companies.

"We are then able to utilize these tax credits to offset a portion of BCBSRI's state tax liability," she said. "By purchasing tax credits at a discounted rate, BCBSRI is able to reduce its administrative expenses, which ultimately benefits its members."

38 Studios has applied for film tax credits of about $14 million over the last two years from the Rhode Island Film & Television Office, according to a recent report.

It remains unclear, however, whether 38 Studios was eligible, under terms of its $75-million loan-guarantee agreement with the state Economic Development Corporation, to apply for the credits, or for a broker to offer them.

Eligibility for the tax credits would have been suspended when the company defaulted on a $1.1-million guarantee payment to the state, on May 1.

Beyond that, the agreement bars the company from taking any "actions to obtain or otherwise avail itself of any tax credit," until it certifies that it has spent all of its share of the 2010 bond proceeds, and secured specified levels of additional financing.

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