Fair enough. I personally would never do such a thing even in that case - I don’t think that would be an acceptable risk in any situation other than one that breeds desperation - but it’s possible that they might, so yeah.
Nice. You just made me feel a lot better about my fascination with this whole silly mess. Which is only silly to me because I knew better than to spend a penny on it.
-Tom
So this bit is hard to pin down. I am not sure how this can be the case, or you need to be a lawyer to grok this shit. Either way, SQ42 and SC are so heavily intertwined, I can’t see how once can be cleanly separated from the other.
For starters, this exclusionary clause, which people have pointed out, is in the Schedule 1 - Definitions. section of the document. ie this bit does not mean shit unless the term ‘Exlcuded Collateral’ is actually used meat of the document.
Which it isn’t under Section 4 or 5 - Charges and Assignments and Trust, respectively. As far as I can see, ‘Excluded Collateral’ is not used anywhere in the document outside of the definitions section, meaning it tells us nothing at all.
The term used in Sections 4 and 5 is ‘Game’ and ‘Game Assets’, defined thusly:
Without viewing the loan agreement, we don’t know what ‘Game’ refers to - is it just SQ42, or SC, or everything? Can’t tell. CIG tell us it is SQ42 only, but a ‘careful review of the security’ in the public documents does not seem to make that clear.
But what does seem to be evident is that more than just the ‘Game’ is up as security as evidenced by Section 4 and 5, but maybe some of that is pretty standard stuff and included whether F42/CIG own any or not (freehold property, for example).
But what is weird, presuming it does only actually apply to SQ42, how can it be so cleanly separated from SC in terms of IP, assets, code, recordings, scripts/scripting, etc? There must be tremendous crossover of many of those things in the SC! If they default and lose a bunch of SQ42 IP, then they lose access to any of that IP used in SC. I can’t imagine CIG don’t realise that and I can’t imagine they are keeping that fact omitted from the bank. Which makes any agreement apparently involving just SQ42 really odd, to my mind.
I can buy the currency hedging angle to a certain extent - a previous global CFO I worked under played FX all the time and hedging markets was a daily business practice, but it was a business conducive to such things.
Yes, this!!! I don’t think they are separable!
Daikatana vibe… I bet Romero is wishing he was in on this
It would be hard if it were the other way around, but the way it is here, SQ42 is clearly a small subset of the overall Star citizen package. SQ42 is basically a set of missions that sit on top of Star citizen.
Based on how they are developing it, there’s likely no actual code, since foundry 42 doesn’t do any of that.
Foundry 42 has a decent number of programmers, especially in the graphics programming department. They’re the ones responsible for a lot of the lighting technology in the game.
Then I stand corrected, I had thought they were the guys who were just making the SQ42 portion of the game.
Although the point stands that SQ42 wouldn’t include the core game code, based on how they are building it.
What about other assets? Ship models, art, story, script, characters, planets, star systems? Even assuming there is no code overlap, there surely is overlap in those. The whole idea of SQ42 is you play/complete it as a precursor to entering the universe proper in SC. There is no way they aren’t re-using assets. Heck wasn’t one of the delays in SQ42 to due development of the sublimation system the were banging on about as a precursor to designing missions that would hang off said system. That’s a core SC game system. I can’t even believe there is no overlapping code - it’s the same engine, with all their tweaks and flight modelling, etc, etc - all defined in code.
I mean yeah, it’s easier to buy that servicing the loan is so trivial that none of this is of particular concern to CIG, but it does beg the question, why get a loan to begin with.
As with @sharaleo, I’m not entirely qualified for legal insight (do we have any lawyers in the thread?), so I don’t know exactly how the two properties would be separated as per the agreement with Coutts.
All I know is that SQ42, in its finished form, would share a lot of assets with Star Citizen (ships, weapons, engine modifications). Most of these assets would have been developed at their other studios, but many would have been developed at Foundry 42.
What I want to know is whether @sharaleo is correct in thinking that the “Excluded Collateral” definition has no actual effect on the agreement, and is basically just there to take up space. From the Inquisitr article:
The final bit of evidence showing the loan isn’t any particular danger comes at the end of page 18 of the loan document, under the title “Excluded Collateral.” This lists Star Citizen the game as excluded collateral, meaning it is not owned by the bank in the event of a default. It will just be everything in regards to the Foundry 42 studio in the UK, which is primarily working on the Squadron 42 spin-off game.
Yep, page 18 clearly, clearly in the definitions section of the document. It being defined means nothing in and of itself unless the term ‘excluded collateral’ is used in the meat of the document somewhere, which I have not been able to locate (oh for a non-pdf version!).
I think I am leaning towards this mostly being a nothingburger - business as usual financing for a geo that is not the primary revenue generator. I think CIG may be being a bit disingenuous about the risk (only SQ42) and it’s relation to SC, but I can buy that terms may be more commercially beneficial than other options (currency transfer), particularly if non-GBP finances are better where they are appreciating under existing investment strategies.
It’s just weird. Perhaps this whole project just has such a perceived fundamentals risk attached to it now that it is affecting their ability to get lines of credit without additional securities to back them, regardless of technicals.
I went and read through the document, and found that the term “Excluded Collateral” is included in the definition of “Collateral” on page 18, which is a term that is used throughout the document.
Ah, great, thanks for that. I figured it might be in another definition somewhere, but missed it.
Given that “all Intellectual Property Rights and all exploitation and distribution and other rights and all title, interest and materials with respect to the video game provisionally entitled ‘Star Citizen’”, are excluded as collateral in all cases, does this mean that assets shared between SQ42 and Star Citizen would not be subject to forfeiture?
Maybe, given the potential asset overlap between SQ42 and SC, this would significantly lower the value of the securities , er, securing the loan, hence making the whole thing very low risk for CIG, supporting their position this is business as usual and no big deal.
On the other hand, if the bank doesn’t realise this and CIG pulled one over them with this clause, I would anticipate some intense good faith legal scrutiny in the event of default.
I reckon it’s the former, though.
That’s a great way to describe the situation. Tip of the hat to you, sir.
At this point we’re just speculating furiously without enough information to know the answer, but one distinct possibility would be that having security over the company and development work which generated the tax credit is necessary for it to be enforceable in the event of default (ie the government might refuse to pay unless the bank could say it earned the credit, via acquiring the rights previously held by the chargor).
Indeed. To me, regardless of speculation, you agree to those terms only if you’re absolutely certain you’re going to receive (or have) the funds to repay the loan. I assume the reason for this credit facility is just an operational issue and that it’s the shortest/easiest path to accessing the funds they need to continue operating as expected.
At the end of the day, F42 is a subsidiary of a parent entity that conceivably has the funds necessary to resolve the loan if it ever becomes an issue. Maybe there’s an ember somewhere, but right now this just looks like a lot of smoke and a whole lot of folk claiming to see flames.
Or you are desperate and have no choice. As mentioned we have no way of knowing.