Star Citizen is now Owned by a Bank

Discussion in 'PC' started by oblivion437, Jun 25, 2017.

  1. oblivion437

    oblivion437 Novice

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    The story of Star Citizen's inevitable failure progresses apace. Despite claims of transparency, most of the company's financials have remained a secret, at least in the US. This is one reason why, for example, people didn't know a project that drew over 150 million dollars in crowdfunding had taken out loans. Derek Smart has the scoop here.

    "But businesses take out loans all the time!"

    Those businesses don't do crowdfunding. They also have products to actually sell. CIG's finances are built entirely on crowdfunding and investment. That's their only income. So that's where the loan repayments are coming from, by the way. Take another view of what that entails. New capital is being chased, constantly, to pay off obligations to old capital while no actual revenue is generated. That's the very definition of a Ponzi scheme. It may not have started that way but it is one now. Now they've taken out a loan (they can't take out more, as per the agreement of said loan) that's in first position and put everything up as collateral which means that in the inevitable bankruptcy proceeding the bank gets everything. Backers and investors are about to get screwed. So it's a Ponzi scheme in endgame.

    I cannot say this strongly enough to anyone who has money in this project and happens to be reading this. Get it out. Now. No, they do not have the right to withhold it, especially if you backed before they revised the terms.
     
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  2. Starling

    Starling Novice

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    Uhhh, no. CIG is probably saving money by taking a loan from Coutts & Co, the bank that serves the richest people in England, among them the Queen of England of all people, a bank which does not give loans out to companies or people that are in dire straits. And why would they do that? Because British pound is likely drop in coming months as Brexit comes to it's conclusion and Britain loses a lot of foreign business. If you have a loan from a bank in Britain while pound drops, the loan is profitable to loaner. The reason why CIG could be doing is so they lose nothing from the businesses they have in England when pund drops, namely Foundry 42 that works on Star Citizen core systems and Squadron 42.

    https://www.reddit.com/r/starcitize...ly_took_out_a_loan_from_coutts_co_in/djc8fes/
     
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  3. oblivion437

    oblivion437 Novice

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    That explanation makes no sense. Their entire revenue is derived from crowdfunds and investment. So they took out a loan that they'll have to repay interest on using those same funds. How does this save them money? Converting cash reserves into another currency while the pound is still at its current strength and reconverting back to pounds after the drop would achieve the same effect. Look closely at the terms of the loan itself. To secure it they had to put up the entirety of their ownership of Star Citizen and are now in the position of a licensee. Coutts and Co. have also been on the receiving end of penalties for participation in money laundering. I wouldn't be dragging their reputation into this as though it were essentially relevant.

    Look, the project is about to go under. The writing's on the wall. This is the endgame. I've made the noise, I've tried to help. Do with it what you will.
     
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  4. Starling

    Starling Novice

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    Sure, I'll keep an close eye on the project as I have for years and support it as I have for years.

    I do have to warn you against believeing anything Derek Smart writes however. He's a known game developer but it's not games that he is known for. I have known of him for over a decade and mostly from his ridiculous antics of starting flamewars in every gaming forum imaginable. He hasn't made a viable game ever, his latest Line of Defence being in developement since 2009 and has been in Early Access since 2012 and it still looks like a game made in 2002 and is nowhere near completion. He's also infamous for deleting negative reviews on Steam and threating to sue everyone who ever says anything negative about him. He has yet to do it. The gaming journalists don't take him seriously and none of his "scoops" never go anywhere.
     
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  5. oblivion437

    oblivion437 Novice

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    Smart isn't really the source, he's just someone that others feel safe enough to talk to. Is his reputation in the toilet? Yes. Is that justified? Yes. But a poisoned well can still draw water and after the dustup between The Escapist and CIG, I've given everything they've said a sidelong glance.
     
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  6. Starling

    Starling Novice

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    I haven't ever seen any proof that anyone has told Smart anything as his "sources" somehow always coincide with information posted on SC reddit.

    But oh well, in case, end of debate:
    https://robertsspaceindustries.com/...hread/re-uk-tax-rebate-advance-for-foundry-42
     
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  7. oblivion437

    oblivion437 Novice

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    This sounds like bullshit to me for several reasons.

    1 - Why would they put up as collateral the only thing they can ever actually finish and ship?
    2 - Why is Freyermuth lying about the terms of the agreement?
    3 - Take a look at this chart: http://www.xe.com/currencycharts/?from=GBP&to=USD&view=10Y
    4 - The agreement gives a floating charge, which means that yes, everything is up for grabs if they default on the loan.
    5 - But the funny part is...they also have a fixed charge which enumerates literally everything Foundry 42 has of value, including the Star Citizen IP. So Coutts is coming in with a belt and suspenders on. That's a red flag.
    5 - Every aspect of the project is now somewhere between 2-3 years behind schedule. I recall we had a conversation about this sometime ago. Squadron 42 didn't make it out the door in 2016 (when it was already a year behind schedule) did it? It's probably not coming out this year, either. It's also the only thing in the project that isn't a pipe dream.
    6 - The last time I recall Freyermuth opening his trap like this he was threatening legal action against The Escapist for printing articles alleging misconduct. Funny how that legal action never materialized but those posts remained up for years.
    7 - This message is directly to the backers, not to anyone else. Same with their responses to The Escapist. Did they have a similar thing when a lot of noise got made about them trying to (illegally) close the refund window?
     
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  8. Starling

    Starling Novice

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    Fine, you choose to believe that and I choose to believe opposite. When one or the other comes to pass, one of us gets to rub it under the nose of the other. And if something in between comes to be, we'll just mope together for opposite reasons, okay?
     
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  9. FrozenBacon

    FrozenBacon Veteran

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    I never "donated" to gain access to the game mainly because I want to only pay for a finished product. The game seems to have been in development hell for a while, dangling occasional updates in front of backers to keep then interested. I am really looking forward to this game, though. I may give the company money if there was an actual game for people to play right now, but after 5+ years all you can do is walk around ships and fuck around in space a little bit. No thanks.

    Anyway, they say this loan is because of the uncertainty surrounding brexit. By taking out a loan they help mitigate any risk that may occur due to the devaluation of the UK pound. Makes a bit of sense, but I can see some flaws in that plan. I'm no financial expert, though.
     
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  10. Jonathan_Leack

    Jonathan_Leack Former Executive Editor

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    From my understanding, this is an early financial move to secure more funding. I don't know all the details, but it sounds like a good move for the sake of funding what has become one of the most expensive games ever made.

    I really hope this game ends up being great. The alpha I played was atrocious.
     
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