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Star Citizen studio responds to rumors of financial crisis

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There was something of a brouhaha over the weekend when word went out—sparked, as far as I can tell, by this NeoGAF thread—that Star Citizen studio Cloud Imperium Games was in financial trouble. That internet analysis sprang from the fact that the studio had taken out a loan from UK bank Coutts and Co., using virtually everything it owned as collateral, despite having raised $153 million (and counting) in crowdfunding. 

How could anyone possibly need more money than that, the theory went, unless something, somewhere, had gone terribly wrong? Not everyone saw looming catastrophe: Some redditors, for instance, suggested that the loan could be simply a hedge against a tumbling pound sterling, or perhaps an effort to take advantage of low interest rates. But the chatter was persistent enough to prompt Cloud Imperium to release a statement explaining what exactly the loan was for. 

"Our UK companies are entitled to a Government Game tax credit rebate which we earn every month on the Squadron 42 development. These rebates are payable by the UK Government in the fall of the next following year when we file our tax returns," CIG co-founder and legal counsel Ortwin Freyermuth explained in a forum post.

"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." 

As for the collateral, Freyermuth described it as "absolutely standard and [pertaining] to our UK operation only." The "prime collateral" on the loan is actually the rebate entitlement itself, he continued, and while the UK-based companies guarantee repayment, the posting of other collateral—which, he noted, "specifically excludes Star Citizen"—"is a formality and nothing else."   

"This security does not affect our UK companies’ ownership and control of their assets," Freyermuth wrote. "Obviously, the UK Government will not default on its rebate obligations which will be used for repayment, and even then the UK companies have ample assets to repay the loan." 

It's a perfectly reasonable explanation, but realistically I don't think it will do much to dampen the controversy that's been swirling around Star Citizen almost from the very beginning. Nor will this: The release of the 3.0 alpha that has been slated for the end of June has been pushed back to an "aim date" window sometime in August.  

Andy has been gaming on PCs from the very beginning, starting as a youngster with text adventures and primitive action games on a cassette-based TRS80. From there he graduated to the glory days of Sierra Online adventures and Microprose sims, ran a local BBS, learned how to build PCs, and developed a longstanding love of RPGs, immersive sims, and shooters. He began writing videogame news in 2007 for The Escapist and somehow managed to avoid getting fired until 2014, when he joined the storied ranks of PC Gamer. He covers all aspects of the industry, from new game announcements and patch notes to legal disputes, Twitch beefs, esports, and Henry Cavill. Lots of Henry Cavill.