Malta Enterprise scrambles to recover €8 million as TRC Entertainment goes under

Malta Enterprise 'doing their best' to recover the €8 million investment they had invested into TRC

 

Thwarted wishes: TRC’s inaugural project, Wishingtooth, failed to generate any interest on the digital gaming marketplace
Thwarted wishes: TRC’s inaugural project, Wishingtooth, failed to generate any interest on the digital gaming marketplace

Malta-based gaming company TRC Entertainment has laid off the bulk of its staff in the midst of reports of unpaid wages over several months.

Originally setting up shop in Malta in 2011 with the aim of putting a child-friendly game, Wishingtooth, on the market, TRC struggled to turn its first project into a profitable initiative.

Sources say that TRC – founded by Peter Robinson – had approached Malta Enterprise in 2011 with promises that it would help galvanise the local gaming community. At the time, Malta Enterprise agreed to become a shareholder in the venture, forking out €4 million (equivalent to 15% equity) along with an additional €4 million in investment aid (paid in cash), with the promise that TRC would become a profitable company by the end of 2011.

However, it soon transpired that TRC’s inaugural project, Wishingtooth – an interactive storybook targeted at children – was not yielding sufficient interest in the market. To make matters worse, sources claim that the project was further hampered by a lack of clear creative direction.

As the company reshuffled its staff over and over again, employees began to question its financial stability.

Sources described how TRC used the Ireland-based company Euphoria Media to channel its investors (a fact corroborated by an article published by GamesIndustry.biz last week).

“The model is that investors put money in Euphoria Media, and Euphoria buys TRC shares. So TRC didn’t need to post any revenues as long as they could find new investors. This allowed the company to survive very long without delivering anything,” a source told MaltaToday.

“For very long employees raised the concern that the company strategy would not yield any revenues for a long time,” the source added.

That ‘fatal’ blow to the company seems to have been the direct result of Euphoria eyeing a particularly large investor. When personal matters prevented the investor from making good on promises, TRC suffered a blow it was unable to recover from.

“The chairman of Euphoria went after a large investment which would have dwarfed the other investors. So they put all efforts into that one person,” the source said.

“Unfortunately, [the investor’s] wife was then diagnosed with cancer, which took their attention away from Euphoria and TRC.
“At that time he had signed the con-

tract to buy the shares, but as he didn’t pay, Euphoria couldn’t do anything, nor complete the round of financing with other investors, until the delay he had to pay expired – this was July, I believe,” the source added.

Euphoria Media has also since been stricken off as a company, and a glaring conflict of interest is yet another unsavoury detail of the entire affair: TRC director Simon Smith is also on the board of Euphoria Media.

But despite Euphoria being stricken off, the source said that, “TRC’s executive keeps maintaining that salaries will be paid through guarantees Euphoria provided them”.

However, it wasn’t just a compromised financial structure that led to TRC’s demise. The source reports that the company failed to keep a consistent team together. Having “rounded up quite a few accomplished professionals from various parts of the world,” in order to attract investors, the TRC executive apparently did not manage to hold on to this team for very long.

“The team of experienced professionals fell apart very early and most of them quit. At least one of them was fired for raising concerns about feasibility. Consequently the first era of the company was over and much of the work accomplished was thrown away.”

A new management was subsequently hired, but the source claims that they were compromised by a particular individual who, despite lacking experience in the field, convinced the management that he could lead the team, “and ended up entrusting his friends – a group from Texas – with everything”.

“The company found its management completely at odds with its workers and conflicts rose to very high levels where there was more politics than work being accomplished,” the source said.

Yet another change to the management “marked the beginning of a more productive stage,” for TRC, with the executive appointing a new management team that was “supposed to work like a committee”.

“But eventually everyone found themselves paralysed by having to work as a large group and people started to disengage, as anything was bound to go through endless meetings and reviews,” the source said.

The executive then reacted to this problem by choosing three people to head the committee, “two of them from the original ‘Texas group’ and a third one that was just there to collect a salary while

working on his own projects”. The source added that, “Ultimately, what TRC accomplished in two and a half years with close to 100 people could have been accomplished in one year with 30 people”.
On their part, Malta Enterprise have told MaltaToday that they are doing their best to recover the €8 million investment they had invested into TRC.

Expressing confidence that Malta’s efforts to branch into the gaming industry will not be affected in the long run by the TRC debacle, an ME representative said that efforts are being made to find jobs for ‘stranded’ former TRC employees among other gaming companies based on the island.

“Luckily there are still a number of internationally-renowned gaming companies currently operational in Malta – companies which, it must be said, have a better financial track record than TRC ever did,” an ME spokesperson said, mentioning Ubisoft, Exient and 4A as examples.

The spokesperson added that the number of such companies is expected to increase once ME open the digital hub next to the Life Sciences Park in San Gwann.

The spokesperson added that ME is also helping former TRC employees to set up their own businesses.

“If there is one positive thing to emerge from all this, it’s that at least some people have been trained in the field,” the spokesperson said.

More in Business News

Get access to the real stories first with the digital edition

Subscribe