crazysapertonight
Member
IP was under the loan already.
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Star Citizen Alpha 2.0 | The 'Verse Awakens
- Thread starter Raticus79
- Start date
IP was under the loan already.
Giftofgab24
Member
No it's not. The bank owns everything to do with the game and its distribution. CIG has exclusive rights for it. I'm excited to see what this game looks like when it's finished.
Cooling off refers to both sides. Leave the banning decisions to us.
I feel like you're missing the point. I could provide any number of documents without context when I have no experience in those fields, and present them in any way I please.
Yes, in a quick hot take that document looks like Star Citizen literally bet the farm on getting more money to complete this project, and you really want to believe this is true, but if all you can say is "It's in the documents look right there" you're not a credible source. That's all it is.
And it's why the mods locked the last thread. Because it's just going to be a back and forth of people like you saying "Doomed" and the other side saying "Fake News".
I don't wanna step on no toes. I genuinely want an honest take on the loan documents. Trying to stop the death spiral before it starts is my only hope of getting that.
I'm personally on the side of Star Citizen being a failure from the start, but I'm not so vindictive that I wish ill on the project. I'm just fascinated by how this all went down.
I love how many people want big projects to fail, whether it is Star Citizen, Nintendo, Xbox One, Destiny 2, whatever... Instead of enjoying gaming like everyone else and wanting more options that they can play, their ego's have to be vindicated by wanting to be right on a video gaming forum. I mean, it sure would suck if this spells trouble for the whole game, but that's not because I invested lots of money in this game (I only spent the same as a normal triple AAA game), but because I would miss out on a potential good game. Yet we still need discuss why Elite is the 'better' game, not knowing that different games can exist in the same market space. Super Mario Odyssey won't suck because Spiderman won people's choice, and your Xbox games won't get worse if BotW gets a 98 Metacritic or if The Last of Us wins GOTY.
Nobody forces you to play or pay for Star Citizen. If you don't like it, don't pay. If you do pay, you should now the risks tied to it and if you were stupid enough to pledge the sum of a new car for one game and can't afford food and housing , maybe you need to sort out priorities. But crying on a video game forum how other people spent their money is pitying, nobody needs to hear how bad of a purchase the product was that they are actually enjoying.
CIG just shot themselves in the foot.
I don't know how much the rest of you know about the financial sector (I'm an expert), but loans and debts are huge parts of it. It's not like it is in America where you can bankrupt succesfully by being an fraud. If you take out a mortgage in the UK, you bring shame to yourself, and the only way to get rid of that shame is repentance.
What this means is that Star Citizen backers, after hearing about this, are not going to want to purchase SQ42, nor will they purchase any more ships. This is HUGE. You can laugh all you want, but CIG has alienated an entire market with this move.
CIG, publicly apologize and pay off your loan or you can kiss your business goodbye.
Seems like it is only about SQ42 though, SC seems to be exempt from the deal, from the looks of it. I doubt the SQ42 as a whole is worth much, hence why they had to put the whole game up.
Nobody forces you to play or pay for Star Citizen. If you don't like it, don't pay. If you do pay, you should now the risks tied to it and if you were stupid enough to pledge the sum of a new car for one game and can't afford food and housing , maybe you need to sort out priorities. But crying on a video game forum how other people spent their money is pitying, nobody needs to hear how bad of a purchase the product was that they are actually enjoying.
CIG just shot themselves in the foot.
I don't know how much the rest of you know about the financial sector (I'm an expert), but loans and debts are huge parts of it. It's not like it is in America where you can bankrupt succesfully by being an fraud. If you take out a mortgage in the UK, you bring shame to yourself, and the only way to get rid of that shame is repentance.
What this means is that Star Citizen backers, after hearing about this, are not going to want to purchase SQ42, nor will they purchase any more ships. This is HUGE. You can laugh all you want, but CIG has alienated an entire market with this move.
CIG, publicly apologize and pay off your loan or you can kiss your business goodbye.
Seems like it is only about SQ42 though, SC seems to be exempt from the deal, from the looks of it. I doubt the SQ42 as a whole is worth much, hence why they had to put the whole game up.
staticneuron
Member
It's about time you hardcore fans understand that this game has been vaporware all along. The gaming community will let bygones be bygones and you have a choice to Join the outrageously happy community of Elite Dangerous and/or Line of Defense. It only comes at the low low asking price of renouncing Chris Roberts as your Lord and Savior.
CIG stands for "Crashing into Ground" while RSI stands for "Retards Still Invest". It is good that you have finally come to your senses.
My guess what that says is the loan collateral is the single player campaign (Squadron 42) that will be released seperately, not the main Star Citizen game, nor anything else they've already used as collateral for other loans.
RubberJohnny
Banned
When have the side yelling "Fake News" ever been right?
TheVoidDragon
Member
Why would they be mentioned in both sections, though? The part about collateral says it means the rights relating to what's discussed in section 4 and 5, other than those specifically excluded, with those rights in section 4 and 5 being in the excluded section. Is collateral different from what's mentioned there?
from the reddit:
https://www.reddit.com/r/starcitizen/comments/6j828y/cig_recently_took_out_a_loan_from_coutts_co_in/
"It is also possible that this is nothing more than hedging. CIG holds the majority of their funds in the US. Due to the recent election in Britain, it is likely the British pound will drop - and by a significant amount. It has been on a downward trend for a while now. So instead of shifting assets to the UK for the entire year right now and taking the exchange/tax hit at the current rate, they take out a loan - backed by cash assets in the US (which would require the box checked on the loan to be checked) and pay for Foundry 42 operating expenses out of there.
That will actually earn them money as long as the interest earned in the US + the devaluation of the pound is more than the interest rate of the current loan. A cash backed loan would probably have a reasonably low interest rate, so it isn't much of a risk.
This same type of thing is the reason why most companies do not pay operating expenses from cash reserves. It is almost always easier to do it this way.
It is unlikely CIG is running low on cash. Due to British law, an floating charge loan that results in insolvency within a single year is frequently discharged as the bank should have known better than to offer a loan to an insolvent company. Other creditors get paid first. So the bank had to make a judgement call on whether or not they believed CIG was solvent now and in a situation that they would be for at least a year.
This is almost certainly tied to the pound dropping like a rock. It is getting funds where they are needed without shifting cash around or pulling it from current investments."
and
"That "everything up as collateral" is a legal requirement for the type of loan. There are really only two ways to back a loan by cash or investment assets. You need a way to guarantee that you won't spend that cash or get rid of the investment and leave the bank with nothing for collateral. So instead, you put up "everything" for collateral. This is basically a fancy way of saying you promise to pay and if you don't the bank has claim on liquidation of assets to cover their costs.
As such, for legal reporting you don't put on the form that you are backing it with trust fund XXX - even if that is what you told the bank and showed them. There is a simple check box that tells the courts if the bank has claim on assets to recover the loan or if it does not. In this case, you get a much better interest rate by backing with cash then trying to get an unsecured loan. The lower the interest rate, the better the chance you have to not lose money on the process.
If I were to guess (and I haven't seen their finances - this is just what I would do) they have realized that the pound is likely to drop. Instead of transferring cash from their US subsidiary, they secured the lowest interest rate loan they could using this type of backing. They then put the cash in a short term financing vehicle with a 3%ish rate of return and will sit on it until the loan comes due."
https://www.reddit.com/r/starcitizen/comments/6j828y/cig_recently_took_out_a_loan_from_coutts_co_in/
"It is also possible that this is nothing more than hedging. CIG holds the majority of their funds in the US. Due to the recent election in Britain, it is likely the British pound will drop - and by a significant amount. It has been on a downward trend for a while now. So instead of shifting assets to the UK for the entire year right now and taking the exchange/tax hit at the current rate, they take out a loan - backed by cash assets in the US (which would require the box checked on the loan to be checked) and pay for Foundry 42 operating expenses out of there.
That will actually earn them money as long as the interest earned in the US + the devaluation of the pound is more than the interest rate of the current loan. A cash backed loan would probably have a reasonably low interest rate, so it isn't much of a risk.
This same type of thing is the reason why most companies do not pay operating expenses from cash reserves. It is almost always easier to do it this way.
It is unlikely CIG is running low on cash. Due to British law, an floating charge loan that results in insolvency within a single year is frequently discharged as the bank should have known better than to offer a loan to an insolvent company. Other creditors get paid first. So the bank had to make a judgement call on whether or not they believed CIG was solvent now and in a situation that they would be for at least a year.
This is almost certainly tied to the pound dropping like a rock. It is getting funds where they are needed without shifting cash around or pulling it from current investments."
and
"That "everything up as collateral" is a legal requirement for the type of loan. There are really only two ways to back a loan by cash or investment assets. You need a way to guarantee that you won't spend that cash or get rid of the investment and leave the bank with nothing for collateral. So instead, you put up "everything" for collateral. This is basically a fancy way of saying you promise to pay and if you don't the bank has claim on liquidation of assets to cover their costs.
As such, for legal reporting you don't put on the form that you are backing it with trust fund XXX - even if that is what you told the bank and showed them. There is a simple check box that tells the courts if the bank has claim on assets to recover the loan or if it does not. In this case, you get a much better interest rate by backing with cash then trying to get an unsecured loan. The lower the interest rate, the better the chance you have to not lose money on the process.
If I were to guess (and I haven't seen their finances - this is just what I would do) they have realized that the pound is likely to drop. Instead of transferring cash from their US subsidiary, they secured the lowest interest rate loan they could using this type of backing. They then put the cash in a short term financing vehicle with a 3%ish rate of return and will sit on it until the loan comes due."
We dont know what "the game" actually refers to in the loan documents. It could be either of them or both really.
What we know from the documents with 100% certainty is: The negative pledge and floating charge on all future assets pretty much means that for all intents and purposes they are locked into that loan and cant secure any more from here on out till they actually pay of that loan.
What we can assume with reasonably certainty- That this shit is not good. If its a small or large loan its irrelevant.
If its a small loan it means that the bank valued CIG so little that they put a fixed charge on everything they had right now that could have a fixed charge on it and floating charge on everything they'll have till they pay of the loan for a small loan. And CIG agreed to the terms.
If its a large loan then CIGs assets were valued better, but that means that they've dug themselves into a hole where they need a substantial amount of money to keep operating.
Reddit insane cult option- CIG is now a foreign exchange investor willing to put pledges dedicated to a game into a volatile currency market in the hopes of getting more money for said game development. Completely ethical and prudent! https://www.youtube.com/watch?v=Maa0K4ycASo but change the $100 check into a space ship
RubberJohnny
Banned
Sorry Ganyc, that's a load of rubbish. If they wanted to hedge against currency fluctuations there are financial vehicles designed to do exactly that, that don't require you mortgaging your whole company.
People suggesting that CIG have all these investments they've never talked about that they manage really well and make loads of money on is completely at odds with the picture painted by the public figures which show funding just outpacing development costs, CIG really ramping up crowdfunding even though they should have more than enough to finish the game combined with Chris acknowledging they don't have enough cash to finish the MMO. It's cloud cuckoo land stuff.
People suggesting that CIG have all these investments they've never talked about that they manage really well and make loads of money on is completely at odds with the picture painted by the public figures which show funding just outpacing development costs, CIG really ramping up crowdfunding even though they should have more than enough to finish the game combined with Chris acknowledging they don't have enough cash to finish the MMO. It's cloud cuckoo land stuff.
Giftofgab24
Member
I saw someone stating in another thread that the loan is for $1 million US. That's an extremely low valuation, no?
I'm looking for the source now. Will update if I find it.
What do you do for a living? What is your background that you are so certain about all of those things?
Do you have work experience with loans or finance in private banking sector or any banking sector? Any education?
These posts are embarrassing and if Star Citizen gets cancelled tomorrow they'd still be embarrassing.
EDIT: Removed the meme.
RubberJohnny
Banned
Isn't this just an appeal to authority fallacy? We've already had shoot the messenger going on in here. We should really create a "backer bingo" of these sort of tactics.
Giftofgab24
Member
Whoa man. Relax. How is any of what you just asked for relevant to the conversation? He's not claiming to be an insider or have some sort of verifiable secret knowledge that would require him to disclose personal details about his life. This is a forum for discussion. Did you ask the person he was responding to the same questions about his education and background?
No, I think what you read was that you had to have at least 1m pounds worth of assets to bank with Coutts. We dont know the actual value of the loan till they have to report it next year on their accounts.
mercenar1e
Member
on the plus side at least they cant afford additional delays to SQ42.
it goes against your narrative, of course it's rubbish...
Coutts & Co is a bank for the richest people in uk and they are very selective about their clientel (and you must have at least 1.000.000 in tangible assets to bank with them), no reason to believe that cig (foundry42) is in financial trouble (but the financial reports show us that already)
Giftofgab24
Member
That's probably right. I remember seeing someone saying "$1 million for a $150 million dollar game"
He completely denies other post by calling it 'rubbish' which implies that he is sure speculation in quote is not true. Which means that RubberJohnny argument seems to be more relevant or at least well researched.
I think this is good moment to ask about any qualification about this quite hard matter.
Like i have no knowledge about loans, especially in private banking sector which is different on normal banking, and for me its almost Chinese.
----
Thanks for not answering my question.
RubberJohnny
Banned
You don't put up your whole company as collateral if you're financially healthy.
If you're financially healthy companies are just willing to lend you money, knowing you're a safe bet and they'll get it back with interest. It's when you're risky you need to start putting up collateral, and when you have to put up everything you own, what does that say about the risk?
I'm not going to post personal stuff in this thread where people already cyberstalked out my accounts on other forums simply because they didn't like what I was saying.
I knew this day would come... Says a lot that I couldn't distinguish between them.
staticneuron
Member
!!!
What about me, Dictator? WHAT ABOUT MEEEE?!?!?!?!
It happens to the best of us.
lol ok
Sorry for 'attacking' you again...
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Do you really want me to posts a Discord chat here to prove thats not true?
Talking about person that you ignore him/her on the board =/= talking shit.
RubberJohnny
Banned
You literally acknowledged yesterday that people were talking shit about people in here in their private Discord, just because they were critical about the progress of the game.
If you want to call other people out and say they are full of shit, answer the fucking question.
RubberJohnny
Banned
I didn't say anyone was full of shit? I suggested the currency fluctuation claim didn't pass the sniff test, and backed up why the idea that CIG have all these investments and are in great financial health doesn't ring true with their latest actions and statements, which are acknowledging they don't have the budget to finish both games and ramping up crowdfunding.
- 2012: We can build a AAA action game with Hollywood stars and an MMO for $2 million
- 2015: We can build enhanced versions of both for $60 million
- 2017: We have $150 million and have enough left to finish the one further along
- Today: We're mortgaging the whole company to be able to fund releasing something
in fact, yes they do. They are developers and they don't have anything else to use as collateral.
But i'll stop here, my english is not that good to discuss uk financials and loans.
RubberJohnny
Banned
If I just took a loan against all my worldly possessions, I don't think anyone would believe that I don't need any money.
No confirmation of anything so far. I think the general expectation / hope is for 3.0 to be showcased at Gamescom in August, leaving SQ42 for CitizenCon. Of course, at this rate the dream that is Star Citizen will be over within a week, so it doesn't really matter anymore. RIP.
Sean Noonan knew.
TheVoidDragon
Member
I don't know too much about the subject, but collateral is like "If you don't pay it back, we'll take X instead", isn't it? Are you're suggesting banks would just lend money without including any form of collateral for a financially healthy company, basing it entirely on trust and hopes, rather than having something in the contract to cover that even if it's unlikely?
As for putting up all the rights and such to the game, they're a developer, what else would they offer?
staticneuron
Member
He saw where this was going and.....
For the posters that aren't familiar with me, I am kidding
Wait..... that is NOT how banks work? Maybe they could offer.... each employee's first born or one of their limbs. Nothing says "Get er done!" than the threat of taking a limb.
RubberJohnny
Banned
It's not based on trust and hopes, it's based on the financial credit of the company. Banks will look at the company's assets, net income, company structure, accountant reports, etc. and then usually offer (or refuse) a loan with strings attached, the number of strings depending on the financial shape of the business.
I can go to a bank and I can get a loan of a couple of thousand dollars without needing to put my car up as collateral because I have good credit.
Companies are the same - someone mentioned Apple taking out a loan of $7.8 billion as an example of it being normal, but Apple didn't need to put up collateral because they're doing so well and have great credit. CIG went to Coutts with their finances and came back with a floating charge, a fixed charge (on all assets), and a negative pledge. Evidently, their finances did not impress.
Who here against them auditing their books like they initially promised if things got rocky?
I think it would be fantastic if they did and showed that they are very healthy financially. It would be great for people still putting money on the games development. Now if the books look like Shroud of the Avatars then they are royally screwed and it would completely dry out their funding.
I think it would be fantastic if they did and showed that they are very healthy financially. It would be great for people still putting money on the games development. Now if the books look like Shroud of the Avatars then they are royally screwed and it would completely dry out their funding.
TheVoidDragon
Member
How does this not line up with the reason you claimed was "Rubbish"? Taking a quick look into the subject, the purpose of a secured loan for the company taking it is that it can provide them with more favorable terms than those of an unsecured loan without collateral...which if their whole reason for getting the loan in the first place revolves around interest rates and the value of the pound making this a financially better alternative then paying for these expenses themselves, is going to matter. According to wikipedia "The creditor may offer a loan with attractive interest rates and repayment periods for the secured debt." https://en.wikipedia.org/wiki/Secured_loan and that's part of the reason Ganyc posted. They could get an unsecured loan without collateral but then they'd have worse interest rates and end up making this whole thing not worth it.
well, you can always ask coutts & co if they give you a loan without collateral (which i believe they won't)
staticneuron
Member
There are however stringent requirements to being accepted as a client, not just based on average and total financial assets. Prospective clients need at least £1,000,000 in investable assets, not including real estate.
I guess not just good credit and good feelings alone. Coutts is so mean.
RubberJohnny
Banned
I don't even know what point you're trying to make now? This has never been about CIG being out of money this very second, it's about them seeing they'll be out of money before SQ42 releases and taking a big risk to keep going.
I don't think anyone is taking issue that CIG have taken a secured loan, that's what this whole discussion is about? Gaync appears to have edited a lot in after I replied.
The banks even put a charge on their accounts. So it wouldn't be hard for them to have at least 1 million left in their accounts. If they didn't they were far beyond screwed. (They must be burning upwards of 3 million a month between all their studios.)
What kind of example is that?
It all depends of how big loan is and what terms are like.
Loans are not free, bank needs to profit on it. They can profit by taking some stuff from the creditor if loan wont be payed or by charging him high interest rates upfront to recover initial investment faster and then additionally profit more long term.
One is low risk, low profit and second is high risk, high profit solution. Of course hybrids are also viable.
Your example is the second one and if CIG would go for it, they would waste more backers money in the end due to high interest rates.
If they know that they will pay it back than going with first solution is smarter idea, because they will pay less for loan at the end.
Dictator93
Member
#notmymessiah #badjojo #thecylonsneverhadaplan
Panajev2001a
GAF's Pleasant Genius
Plus Apple has hundreds of billions in EU banks that they do not want to pay US taxes on so they prefer to take out debt in the US and banks know how much profit Apple makes each quarter too.
Dictator93
Member
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