No, Star Citizen isn’t owned by a bank now

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Over the weekend some news came out about the latest financial dealings of Foundry 42 and Cloud Imperium Games, the money-making monolith that’s slowly (ever-so slowly) putting Star Citizen together. They’ve taken out a loan, a pretty ordinary thing to do, and put up much of their assets as collateral, a slightly less ordinary thing to do. As the usual buzzards have been circling, hoping for their long-sought corpse, Cloud Imperium Games issued a statement clearing up the whole matter.

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The drama began, as it so often does, with some sleuthing of the various legal documents tracked by Companies House, the UK governing body for limited companies and their dealings. The latest listing for Foundry 42 there - Cloud Imperium Games’s British studio - includes a link to a PDF of their latest loan agreement with Coutts & Co, a highly regarded British business bank. Due to the complex nature of high level financial deals, it’s almost indecipherable, but section 23.1 makes it rather clear what the penalties for non-payment are - Coutts and chums would essentially own “the game.”

And that is where the complexities begin. As explained by Cloud Imperium Games’s co-founder and vice-chairman Ortwin Freyermuth on the forums, this collateral “specifically excludes Star Citizen” referring only to single-player portion Squadron 42 (which is what Foundry 42 are making, if you didn’t catch the name link). He also explains that the loan is to cover an advance on a tax rebate:

“Foundry 42 and its parent company Cloud Imperium Games UK Ltd. have elected to partner with Coutts, a highly regarded, very selective, and specialized UK banking institution, to obtain a regular advance against this rebate, which will allow us to avoid converting unnecessarily other currencies into GBP.  We obviously incur a significant part of our expenditures in GBP while our collections are mostly in USD and EUR.  Given today's low interest rates versus the ongoing and uncertain currency fluctuations, this is simply a smart money management move, which we implemented upon recommendation of our financial advisors.”

He goes on to explain why this is nothing to worry about when it comes to the possibility that a bank may end up owning all that IP and work, saying that “Per standard procedure in banking, our UK companies of course stand behind the loan and guarantee repayment which, however, given the reliability of the discounted asset (a UK Government payment) is a formality and nothing else.”

Going by this it’s another mountain made out of Star Citizen’s long-suffering molehill. There are contrary readings of both the documents and the official statement in this lengthy Reddit post, if you’re interested. We’re contacting both Cloud Imperium Games and the bank itself for further clarification.

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Arucat104 avatarmidimaker avatarBen Barrett avatarSkyrant Kangaroomouse avatarAnaryl avatarAever avatar+3
Arucat104 Avatar
3
4 Months ago

A little advice reagarding the "lengthy Reddit post"... the person behind this account is no other than Derek Smart. I guess you do not want to be associated with him. But overall the article is objective enough.

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Ben Barrett Avatar
492
4 Months ago

There doesn't seem to be any direct evidence it's the man himself, but we're aware that it is not a wholly unbiased source. Rest assured, we're doing due diligence when it comes to investigating all angles.

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midimaker Avatar
137
4 Months ago

The goons will be laughing more than ever seeing that CIG needed to wheel Ortwin out for a statement, they will find that and the vehement defense of the project hilarious.

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Monkey Daddy Avatar
2
4 Months ago

CIG literally does not care about the liar and hypocrite Derek Smart and his Goons say, which is why they never respond to any of their unintelligent babble. They will respond to there being general rumors that come from other sources and ended up being in the gaming news. haven't you noticed the gaming new industry literally ignores everything Derek Smart says? That is because it has been proven wrong time and time and time again, sure he ends up being kind of right at a rare time, you know the whole "broken clock is right 2x a day", it also helps that Derek Smart likes to make contradictory posts, so if one is right and the other one is wrong he gets to jump for joy like the 6 year old kid that he acts like.

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midimaker Avatar
137
4 Months ago

Errr so what? It is not about whether CIG cares, my post was that the goons would find it funny. That is all.

For someone who says that Derek Smart matters so little you sure do seem to be making a big deal out of him.... strange that.

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Aever Avatar
631
4 Months ago

Why the hell do they need so much money? I mean, we've given them all the money they asked for, then tons and tons more. When is it enough?

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MλXX [PA-D] (◕‿◕✿) Avatar
5

Are you mentally disabled or didn't read the article? CIG didn't ask for more money, it asked for a loan in British pounds through a bank that will allow them to repay in USD so that they don't have to convert the crowding USD and EUR to GBP and don't have to pay the fee either. Plus they can do the tax rebate that way.

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midimaker Avatar
137
4 Months ago

It is an advancement so it is more money now rather than waiting for it next year. For someone who wants to offensively question a person's mental faculties you don't seem to be able to grasp the basic situation at hand.

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BloodRath Avatar
1
2 Months ago

Why wasn't this released prior as it should have been, this whole situation smells of dirty deals been done behind closed doors, maybe it's about time another full audit was done to see where all this money has been going and to who .

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Skyrant Kangaroomouse Avatar
5
4 Months ago

Question remains why they need such a small loan now (tax rebate is estimate below $5 million) and why they had to give the bank a floating charge and negative pledge. It's not currency exchange rate, that is the biggest bullshit i ever heard because neither CIG nor the Bank knows how the pound will develop and it might even cost CIG more if the pound recovers.

Floating Charge means that from now on everything F42 UK does is covered as collateral even if it does not exist yet. They create a new ship, it's automatically part of the collateral. Which extends to Star Citizen. The exclusion of Star Citizen is in name only (the IP).

Negative Pledge means that F42UK and parent company can not get any other loans. If for example CIG US would try to get a loan in the US and send money to CIG UK they would be in breach of contract and default on the loan.

This is typically only done for bailout loans. Never for a simple advance on tax were you typically only put up the tax credit as security and maybe a savings account.

The Bank obviously thought that there is a good chance CIG will not make it to the end of the fiscal year to get the tax rebate and therefor asked them to put up everything. This is a private Bank that knows when to make profit and it is pretty obvious that they have attached a very high interest rate on this and hope CIG will default.

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Anaryl Avatar
12
4 Months ago

You clearly have *no idea* what you're talking about.

First of all " It's not currency exchange rate, that is the biggest bullshit i ever heard because neither CIG nor the Bank knows how the pound will develop and it might even cost CIG more if the pound recovers."

Floating Charge means that from now on everything F42 UK does is covered as collateral even if it does not exist yet. They create a new ship, it's automatically part of the collateral. Which extends to Star Citizen. The exclusion of Star Citizen is in name only (the IP)."

No it doesn't.

All currency conversion transactions carry a fee. So if you're taking most of your moeny in USD, but a significant part of your outgoings are in pounds, you will have to pay a fe on transferring that money into GDP.

"This is typically only done for bailout loans. Never for a simple advance on tax were you typically only put up the tax credit as security and maybe a savings account."

No it isn't."The Bank obviously thought that there is a good chance CIG will not make it to the end of the fiscal year to get the tax rebate and therefor asked them to put up everything. This is a private Bank that knows when to make profit and it is pretty obvious that they have attached a very high interest rate on this and hope CIG will default."

You're making this up as you go. Why would the bank want the IP? That means they wouldd have to sell it. That involves greater risk than simply getting the tax rebate which I'm going to assume is at the of the financial year.

Anybody's who ever worked in a bank can easily see that everything you wrote is entirely wrong and that you're spouting what is commonly referred to as "bullshit".

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Skyrant Kangaroomouse Avatar
5
4 Months ago

I am impressed by your counter arguments...oh wait, you had none. Thanks for confirming my facts.

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