Dr. Derek Smart PhD prophe­cies the end of days

PCPOWERPLAY - - Game News -


has popped up that, on the sur­face, seems to sug­gest that the makers of the long-awaited await Star Ci­ti­zen may be in fi­nan­cial trou­ble. News popped up on Press Start that UK-based Foundry 42, a sub­sidiary of Cloud Im­perium Games, has taken out a loan with the bank Coutts & Co, and has lever­aged as col­lat­eral a large amount of the com­pany’s in­tel­lec­tual prop­erty.

Ba­si­cally - miss a pay­ment, and the bank then owns the as­sets.

It sounds more dras­tic than it is, how­ever. For one, Coutts - a fi­nan­cial in­sti­tu­tion that only deals with high value, re­li­able clients, like rock stars and even the Royal fam­ily - is not in the busi­ness of hand­ing out loans to fail­ing com­pa­nies. It would much rather make its money from in­ter­est, than ran­dom bits of an un­fin­ished game.

Fur­ther, the doc­u­ment that re­vealed the news, and was found by a NeoGAF poster over the week­end on the UK web­site Com­pa­nies House ( as re­ported by In­quisitr. com), points out that it’s only Foundry 42’s as­sets that are up as col­lat­eral - that means only as­sets per­tain­ing to the stand­alone Squadron 42 are in ques­tion, not Star Ci­ti­zen it­self. Which CIG then re­it­er­ated on its own fo­rums, go­ing on to add:

“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.”

It’s es­sen­tially a pretty stan­dard bit of busi­ness process. But it says a lot about the com­plex ex­pec­ta­tions around this com­pany and this game - and the $150 mil­lion it’s al­ready made via var­i­ous forms of ship-sales and crowd­fund­ing - that what is ef­fec­tively nor­mal prac­tice for many other com­pa­nies (such as Ap­ple) has caused such a shock­wave among both Star Ci­ti­zen fans and de­trac­tors.

Derek ‘Bat­tle­cruiser 3000’ Smart is ar­guably the most vo­cal of the lat­ter, and of course he was quick to light the pyres of Star Ci­ti­zen’s once again im­pend­ing doom via his blog. But watch­ing Star Ci­ti­zen crash and burn seems to be his only ca­reer now, so maybe take it with a grain of al­beit en­ter­tain­ing salt.

“That they took a loan against such a SMALL tax credit, should be alarm­ing that they would even need to. If af­ter get­ting $150m + in­vestor money + loans, you also need to pledge ALL as­sets for a high-risk loan against a measly tax credit, that’s a prob­lem. Not to men­tion a tax credit that is due in just a few months when they file taxes. But they ap­par­ently need the money right now. Why is that?”

The truth is that this is such a high level of busi­ness op­er­a­tion that it’s hard to work out ei­ther way what - if any­thing - the loan means. As back­ers our­selves... It was ex­cit­ing to be a part of this game four years ago. Now, we chalk it up as a spec­u­la­tive investment that may one day show a re­turn.

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