Ortwin just does so to make the loan sound more respectable, there isn't anything wrong with his word choice.
Wait, if it is a non-issue, as you have claimed previously, why does he need to use word's to make getting a loan more respectable?
You cannot have it both ways.
Calling other companies you actually work with partner's, is not the same as saying you are partner's, partnering, or partnered with a bank because they gave you a loan.
What you on about lol? You say it's not about one word, but you seems to be focusing on that one word.
Because he chooses to use the word "partnering" doesn't change anything, he just made them doing business seem more interesting or fancy, because it's with a private bank that also works with the royal family. It's like those instagram girls who say they hung out with x, but they just sat in the same bar as them, there's nothing behind it, they just want to make it seem cooler than it is.
Anyway, the overall point being made by Max is they would be in trouble with the bank if they told them one thing and then publicly announce something else, and no, using the word "partnering" doesn't fall under that. Also considering the stature of the bank, they probably had to provide a shit ton of information than you would with and average bank and lying to them would be out of the question as this is a company who could and would take them to court and strip them of everything in a heartbeat
Here is an example of a British bank that SPECIFICALLY calls their customers "partners" .. and yes, that includes giving them a loan.
The partners they are talking about, are OTHER loan provider's, working with the bank to supply loan's to small business's, not people who have applied for loan's.
You tried, but failed.
As for Coutts and the service they offer under the heading intermediary partners, if CIG had actually applied for that, surely they would have stated so, instead of just saying, yea, we got a loan.
Nice try Erillion, maybe stick to advising people to have fun.
You seem to have overlooked that it was CIG - an american company - that started a "young and fast growing small company in the UK" .... its called "Foundry 42 UK".
Yes, I DID read the information in the link.
That they are talking exclusively about other loan providers is YOUR personal interpretation. They also list investment partners on their homepage besides other banks ...see for instance: "...The vast majority of our partners listed continue to make new loans and investments in businesses. ..."
The point to take away is: Yes, banks DO call some of their customers "partners".
I always advise people to have fun ... and mean it.
Ortwin just does so to make the loan sound more respectable, there isn't anything wrong with his word choice.
Wait, if it is a non-issue, as you have claimed previously, why does he need to use word's to make getting a loan more respectable?
You cannot have it both ways.
Calling other companies you actually work with partner's, is not the same as saying you are partner's, partnering, or partnered with a bank because they gave you a loan.
What you on about lol? You say it's not about one word, but you seems to be focusing on that one word.
Because he chooses to use the word "partnering" doesn't change anything, he just made them doing business seem more interesting or fancy, because it's with a private bank that also works with the royal family. It's like those instagram girls who say they hung out with x, but they just sat in the same bar as them, there's nothing behind it, they just want to make it seem cooler than it is.
Anyway, the overall point being made by Max is they would be in trouble with the bank if they told them one thing and then publicly announce something else, and no, using the word "partnering" doesn't fall under that. Also considering the stature of the bank, they probably had to provide a shit ton of information than you would with and average bank and lying to them would be out of the question as this is a company who could and would take them to court and strip them of everything in a heartbeat
Here is an example of a British bank that SPECIFICALLY calls their customers "partners" .. and yes, that includes giving them a loan.
The partners they are talking about, are OTHER loan provider's, working with the bank to supply loan's to small business's, not people who have applied for loan's.
You tried, but failed.
As for Coutts and the service they offer under the heading intermediary partners, if CIG had actually applied for that, surely they would have stated so, instead of just saying, yea, we got a loan.
Nice try Erillion, maybe stick to advising people to have fun.
You seem to have overlooked that it was CIG - an american company - that started a "young and fast growing small company in the UK" .... its called "Foundry 42 UK".
Yes, I DID read the information in the link.
That they are talking exclusively about other loan providers is YOUR personal interpretation. They also list investment partners on their homepage besides other banks ...see for instance: "...The vast majority of our partners listed continue to make new loans and investments in businesses. ..."
The point to take away is: Yes, banks DO call some of their customers "partners".
I always advise people to have fun ... and mean it.
Have fun
I did not overlook that CIG created F42, as it has nothing, at all, to do with your post, or my reply, no idea why you even typed that paragraph.
Since you seem to have a reading comprehension problem, here is another snippet of information from the same page, that you linked:
MEET OUR CURRENT PARTNERS
The British Business Bank works with over 90 finance partners to unlock finance for smaller businesses.
Because he chooses to use the word "partnering" doesn't change anything, he just made them doing business seem more interesting or fancy, because it's with a private bank that also works with the royal family.
May as well say it is a private bank that has been found guilty of money laundering, that is just as interesting as being the bank that royalty use.
I agree, but it doesn't change the status that the company has and won't stop people showing off that they're part of it.
The page you linked, is all about the bank, and it's finance partners, finding loans for small businesses.
Look at the list, they are all banks and loan companies.
It is all there, in black and white, with a bit of red thrown in.
It is not my personal interpretation, it is clearly stated on that web page, you just cannot comprehend it for some reason.
There are plenty of banks on that list, but also quite a few INVESTMENT companies. Not to mention such big conglomerates like Hitachi.
Depending on how you define it, CIG can also be considered an investment company investing in a small UK start up called Foundry 42 UK.
"To invest is to allocate money in the expectation of some benefit in the future."
"Investment generally results in acquiring an asset,
also called an investment. If the asset is available at a price worth
investing, it is normally expected either to generate income, or to
appreciate in value, so that it can be sold at a higher price (or both)."
So yes, it IS your personal interpretation.
Again.... the point to take away: Some banks DO call their customers "partners".
Just wanted to post here about the link to my analysis yesterday. I was looking at it from my point of view at work, which is traders put GBP denominated transactions in our USD system, and I have to go in and adjust P&L to get the correct USD amount. That's my fault for not taking a step back and looking at it from the actual economic standpoint. Here's my correction:
More assumptions: We are only dealing with the £3,200,000 and F42 holds onto it through 6/23.
Let's look at a simple example. Let's say CIG gives F42 all the cash it needs at the beginning of the year.
CIG gives F42 the cash upfront at 1/1. The conversion rate at 1/1 was 0.81, so they would transfer $3,950,617 over to F42 for £3,200,000. No loss would be recognized, since they are still holding the cash. If they turned it back around on Jan 1, they could still get $3,950,617.28. On 6/23, the conversion rate is .79, so that's an exchange loss of 0.02 per dollar. CIG would report an exchange loss of ($3,950,617-$4,050,633) = $100,016 on cash held, or £79,012.64.
So, looking at the interest of £72,000 from Edit 3, it seems pretty close. So why take the loan?
Look at the how much the pound has moved in just the last year. CIG isn't giving F42 all of their cash at the beginning of the year, they are most likely giving it on a monthly basis, which means the conversion rate is all over the place, while the F42 operating expenses would be relatively flat. No company wants that kind of uncertainty, especially with Brexit in full swing. It's better to lock in a fixed rate on your (relatively) fixed expenses.
The interest rate is 2.25%, the extra 2% default rate only kicks in if F42 fails to meet its obligations to the bank and it declared in default of the loan. I don't know why people are calling it a high risk loan, when it doesn't even break the 5% rule of thumb for high-risk securities, even with the default rate activated.
The page you linked, is all about the bank, and it's finance partners, finding loans for small businesses.
Look at the list, they are all banks and loan companies.
It is all there, in black and white, with a bit of red thrown in.
It is not my personal interpretation, it is clearly stated on that web page, you just cannot comprehend it for some reason.
There are plenty of banks on that list, but also quite a few INVESTMENT companies. Not to mention such big conglomerates like Hitachi.
Depending on how you define it, CIG can also be considered an investment company investing in a small UK start up called Foundry 42 UK.
"To invest is to allocate money in the expectation of some benefit in the future."
"Investment generally results in acquiring an asset,
also called an investment. If the asset is available at a price worth
investing, it is normally expected either to generate income, or to
appreciate in value, so that it can be sold at a higher price (or both)."
So yes, it IS your personal interpretation.
Again.... the point to take away: Some banks DO call their customers "partners".
Have fun
Ah, the old straw man rear's his ugly head.
Your post does not change the fact (and yes, it is a fact) that the page you linked to, shows a bank, along with partners (that are mostly other banks and loan companies) has a scheme in place to help small businesses acquire loans.
It does not show a list of customers, or a list of companies that have acquired loans from the bank or its partners.
The real point to take away is, that no matter how many times you type it, the example YOU linked does not prove it, it does not even suggest it.
A creative person is motivated by the desire to achieve, not the desire to beat others.
The page you linked, is all about the bank, and it's finance partners, finding loans for small businesses.
Look at the list, they are all banks and loan companies.
It is all there, in black and white, with a bit of red thrown in.
It is not my personal interpretation, it is clearly stated on that web page, you just cannot comprehend it for some reason.
There are plenty of banks on that list, but also quite a few INVESTMENT companies. Not to mention such big conglomerates like Hitachi.
Depending on how you define it, CIG can also be considered an investment company investing in a small UK start up called Foundry 42 UK.
"To invest is to allocate money in the expectation of some benefit in the future."
"Investment generally results in acquiring an asset,
also called an investment. If the asset is available at a price worth
investing, it is normally expected either to generate income, or to
appreciate in value, so that it can be sold at a higher price (or both)."
So yes, it IS your personal interpretation.
Again.... the point to take away: Some banks DO call their customers "partners".
Have fun
If you give them enough money they will call my Dog "King of the World" but nevertheless Coutts explicit statet that they have NO partnership with CIG whatsoever.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it. The cake is a lie.
The page you linked, is all about the bank, and it's finance partners, finding loans for small businesses.
Look at the list, they are all banks and loan companies.
It is all there, in black and white, with a bit of red thrown in.
It is not my personal interpretation, it is clearly stated on that web page, you just cannot comprehend it for some reason.
There are plenty of banks on that list, but also quite a few INVESTMENT companies. Not to mention such big conglomerates like Hitachi.
Depending on how you define it, CIG can also be considered an investment company investing in a small UK start up called Foundry 42 UK.
"To invest is to allocate money in the expectation of some benefit in the future."
"Investment generally results in acquiring an asset,
also called an investment. If the asset is available at a price worth
investing, it is normally expected either to generate income, or to
appreciate in value, so that it can be sold at a higher price (or both)."
So yes, it IS your personal interpretation.
Again.... the point to take away: Some banks DO call their customers "partners".
Have fun
Ah, the old straw man rear's his ugly head.
Your post does not change the fact (and yes, it is a fact) that the page you linked to, shows a bank, along with partners (that are mostly other banks and loan companies) has a scheme in place to help small businesses acquire loans.
It does not show a list of customers, or a list of companies that have acquired loans from the bank or its partners.
The real point to take away is, that no matter how many times you type it, the example YOU linked does not prove it, it does not even suggest it.
A personal opinion of yours.
I accept that this is your personal opinion, but i disagree with your opinion.
The examples given show that banks DO call some of their customers partners. Which was one of the points that were under dispute.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it. The cake is a lie.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
We take the following as given 1) they need money to pay their staff 2) F42 has no income but needs the money now because (1) 3) they will need more money in the future because this loan will give them just 1 1/2 months
Option A The GBP is low we could shove money from USD now over to pay F42 because it may get stronger in the future.
Option B The GBP is low we take a GBP loan now which rates will increase in respect to USD if the GBP strenghtens on top we need to shove money over when the GBP is higher in the future.
Choose one It would be different if they are hoping for a weaker GBP in the future or if they took the loan in USD.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it. The cake is a lie.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
Usually companies take an foreign exchange insurance for that, not a loan:
There are multiple ways to achieve the same result, being one loans. For all we know CIG could have done or is doing this type of stuff within other spheres, it's rather likely really.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
We take the following as given 1) they need money to pay their staff 2) F42 has no income but needs the money now because (1) 3) they will need more money in the future because this loan will give them just 1 1/2 months
Option A The GBP is low we could shove money from USD now over to pay F42 because it may get stronger in the future.
Option B The GBP is low we take a GBP loan now which rates will increase in respect to USD if the GBP strenghtens on top we need to shove money over when the GBP is higher in the future.
Choose one It would be different if they are hoping for a weaker GBP in the future or if they took the loan in USD.
GBP isn't low, though. It's lower than it has been, but even in the past year, it's been as high as USD/GBP 0.83 and as low as 0.74. When you are talking about millions of dollars, that counts for huge swings exchange gains and losses. They could wait and funnel money when the exchange rate is low, but that's terrible monetary policy.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
This has got nothing to do with currency speculation and everything to do with interest rates.
Leaving capital in a bank account today will net you less than 1% interest, which will not even cover inflation.
CIG is doing what everyone else does. You invest your capital to give you a better return, these days you can get secured returns up to around 6% but you have to lock the money up in term. Depending on the type of business, you borrow your operating capital at a much lower rate than what your receiving in your investments. My business requires operating capital in the neighborhood of a million dollars. Personally I don't borrow that money, I just keep my float around that level. All the other money is locked up in different investment accounts. Some short term at lower rates that are easily accessed if needed and some in longer term, where the rates are better but the capital is locked up for a fixed term and can't be retrieved without penalty.
To have money just sitting in the bank at today's low interest rates is to lose money. The inflation rate is higher.
To have money just sitting in the bank at today's low interest rates is to lose money.
This is exactly what I have read many times on how companies manage their money, it's always put up somewhere or re-invested, it's never just "lying there" sitting in the bank.
If we look at CIG's already complex setup to make use of government credits, tax relief and so forth in the several studios they have across the word, it is most likely they are investing funds whenever they can.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
I don't think "buying power" means what you think it means.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
"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. 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."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
"The simple is the seal of the true and beauty is the splendor of truth" -Subrahmanyan Chandrasekhar Authored 139 missions in VendettaOnline and 6 tracks in Distance
Probably spending the money on upcoming convention preparations and overtime for the staff to get everything ready. I think someone said they've been doing this since 2013.
"We all do the best we can based on life experience, point of view, and our ability to believe in ourselves." - Naropa "We don't see things as they are, we see them as we are." SR Covey
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
I don't think "buying power" means what you think it means.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
"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. 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."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
The USD injection claim is straight from their financial statements. They had $3MM of profit (Note 5), but the bulk of their activity ($5.7MM) was from RSI, which is American (Note 11).
If you have a 90 day time frame, yes it looks like the Pound is weakening. If you take it over the past year, though, it's crazy volatile and even strengthened significantly in April, so a 90 day graph is incredibly misleading (Which is naturally why Smart latched onto it).
Notice the sharp downturn in the graph and the jagged performance over the past few months since then. Of course they don't want to be converting anything in GBP right now. This isn't about profit on exchange rates, it's about managing risk.
Or 2% - in conclusion they are betting on a falling GBP when GBP is historically low to justify this loan.
It means they are betting on the GBP strengthening, since a stronger Pound Sterling means the exchange loss would be greater than the fixed rate they have now.
If GBP is strengthening the tax money in the future would be worth more and they have to convert less USD to GBP in the future.
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future. You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
I don't think "buying power" means what you think it means.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
"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. 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."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
The USD injection claim is straight from their financial statements. They had $3MM of profit (Note 5), but the bulk of their activity ($5.7MM) was from RSI, which is American (Note 11).
If you have a 90 day month time frame, yes it looks like the Pound is weakening. If you take it over the past year, though, it's crazy volatile and even strengthened significantly in April, so a 90 day graph is incredibly misleading (Which is naturally why Smart latched onto it).
Notice the sharp downturn in the graph and the jagged performance over the past few months since then. Of course they don't want to be converting anything in GBP right now. This isn't about profit on exchange rates, it's about managing risk.
You could be right.
This is getting incredibly confusing, but I think Dr. Smart may have had the chart flipped:
As you say, the GBP is weakening vs USD in the most recent trend, not strengthening. In this scenario, taking a loan in GBP makes sense to me (I'd prefer to pay this back via earnings in USD 90 days from now).
...again, though, who knows what the timeframe is, and maybe it's more about risk management than prospecting, as you say.
"The simple is the seal of the true and beauty is the splendor of truth" -Subrahmanyan Chandrasekhar Authored 139 missions in VendettaOnline and 6 tracks in Distance
Comments
Yes, I DID read the information in the link.
That they are talking exclusively about other loan providers is YOUR personal interpretation. They also list investment partners on their homepage besides other banks ...see for instance:
"...The vast majority of our partners listed continue to make new loans and investments in businesses. ..."
The point to take away is: Yes, banks DO call some of their customers "partners".
I always advise people to have fun ... and mean it.
Have fun
Since you seem to have a reading comprehension problem, here is another snippet of information from the same page, that you linked:
MEET OUR CURRENT PARTNERS
The British Business Bank works with over 90 finance partners to unlock finance for smaller businesses.
-----------------------------------------------------------------------------
The page you linked, is all about the bank, and it's finance partners, finding loans for small businesses.
Look at the list, they are all banks and loan companies.
It is all there, in black and white, with a bit of red thrown in.
It is not my personal interpretation, it is clearly stated on that web page, you just cannot comprehend it for some reason.
A creative person is motivated by the desire to achieve, not the desire to beat others.
Totally agree. I'm still waiting on the ELE and, also, the whole tax evasion scandal that was imminent like 2 years ago, lol.
Crazkanuk
----------------
Azarelos - 90 Hunter - Emerald
Durnzig - 90 Paladin - Emerald
Demonicron - 90 Death Knight - Emerald Dream - US
Tankinpain - 90 Monk - Azjol-Nerub - US
Brindell - 90 Warrior - Emerald Dream - US
----------------
There are plenty of banks on that list, but also quite a few INVESTMENT companies. Not to mention such big conglomerates like Hitachi.
Depending on how you define it, CIG can also be considered an investment company investing in a small UK start up called Foundry 42 UK.
"To invest is to allocate money in the expectation of some benefit in the future."
"Investment generally results in acquiring an asset, also called an investment. If the asset is available at a price worth investing, it is normally expected either to generate income, or to appreciate in value, so that it can be sold at a higher price (or both)."
So yes, it IS your personal interpretation.
Again.... the point to take away: Some banks DO call their customers "partners".
Have fun
Let's get down to the nitty gritty and revisit my comment on the volatility of the USD/GBP exchange rate.
More assumptions: We are only dealing with the £3,200,000 and F42 holds onto it through 6/23.
Let's look at a simple example. Let's say CIG gives F42 all the cash it needs at the beginning of the year.
CIG gives F42 the cash upfront at 1/1. The conversion rate at 1/1 was 0.81, so they would transfer $3,950,617 over to F42 for £3,200,000. No loss would be recognized, since they are still holding the cash. If they turned it back around on Jan 1, they could still get $3,950,617.28. On 6/23, the conversion rate is .79, so that's an exchange loss of 0.02 per dollar. CIG would report an exchange loss of ($3,950,617-$4,050,633) = $100,016 on cash held, or £79,012.64.
So, looking at the interest of £72,000 from Edit 3, it seems pretty close. So why take the loan?
Look at the how much the pound has moved in just the last year. CIG isn't giving F42 all of their cash at the beginning of the year, they are most likely giving it on a monthly basis, which means the conversion rate is all over the place, while the F42 operating expenses would be relatively flat. No company wants that kind of uncertainty, especially with Brexit in full swing. It's better to lock in a fixed rate on your (relatively) fixed expenses.
The interest rate is 2.25%, the extra 2% default rate only kicks in if F42 fails to meet its obligations to the bank and it declared in default of the loan. I don't know why people are calling it a high risk loan, when it doesn't even break the 5% rule of thumb for high-risk securities, even with the default rate activated.
Your post does not change the fact (and yes, it is a fact) that the page you linked to, shows a bank, along with partners (that are mostly other banks and loan companies) has a scheme in place to help small businesses acquire loans.
It does not show a list of customers, or a list of companies that have acquired loans from the bank or its partners.
The real point to take away is, that no matter how many times you type it, the example YOU linked does not prove it, it does not even suggest it.
A creative person is motivated by the desire to achieve, not the desire to beat others.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it.
The cake is a lie.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it.
The cake is a lie.
A personal opinion of yours.
I accept that this is your personal opinion, but i disagree with your opinion.
The examples given show that banks DO call some of their customers partners. Which was one of the points that were under dispute.
Have fun
Crazkanuk
----------------
Azarelos - 90 Hunter - Emerald
Durnzig - 90 Paladin - Emerald
Demonicron - 90 Death Knight - Emerald Dream - US
Tankinpain - 90 Monk - Azjol-Nerub - US
Brindell - 90 Warrior - Emerald Dream - US
----------------
Now with a weak GBP they would get the money conversion cheap. Instead of this they take away the strengthened Tax money and pay for GBP in the GBP now (due loan) so at the moment they trade GBP for GBP. But when it is strengthening every GBP they pay over time (due fixed rates) will be more expensive. (though the tax money will be paid in the future but the margin went down)
With this tactic they missed the window to invest USD to GBP because you'll never get that much GBP for USD than now (for the case that GBP gets stronger).
To make this loan financially profitable they need the GBP to go down further if it raises the money conversation would be more expensive in the future.
You would be right if the loan was in USD then you want GBP to raise in the future but this is not the case.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it.
The cake is a lie.
Tax isn't my forte, so I'm not following your logic on the tax piece. If we are dealing with a loan in GBP, the buying power will be the same as the tax credit received in GBP. F42 is getting injected with USD. If the GBP strengthens, then it costs more USD to send money over to F42. Since you have a fixed rate loan on money you will receive in the near future in GBP, you bypass that additional cost. If the Pound weakens, then it's cheaper to transfer cash to F42, which could potentially be less of a loss than the cost of the interest on the loan.
If the exhange rate weakens, then the loan was a bad investment. If the exchange rate strengthens, they win out.
1) they need money to pay their staff
2) F42 has no income but needs the money now because (1)
3) they will need more money in the future because this loan will give them just 1 1/2 months
Option A
The GBP is low we could shove money from USD now over to pay F42 because it may get stronger in the future.
Option B
The GBP is low we take a GBP loan now which rates will increase in respect to USD if the GBP strenghtens on top we need to shove money over when the GBP is higher in the future.
Choose one
It would be different if they are hoping for a weaker GBP in the future or if they took the loan in USD.
When you have cake, it is not the cake that creates the most magnificent of experiences, but it is the emotions attached to it.
The cake is a lie.
https://en.portal.santandertrade.com/bank-with-us/global/international-trade-guide-risk-coverage
Leaving capital in a bank account today will net you less than 1% interest, which will not even cover inflation.
CIG is doing what everyone else does. You invest your capital to give you a better return, these days you can get secured returns up to around 6% but you have to lock the money up in term. Depending on the type of business, you borrow your operating capital at a much lower rate than what your receiving in your investments. My business requires operating capital in the neighborhood of a million dollars. Personally I don't borrow that money, I just keep my float around that level. All the other money is locked up in different investment accounts. Some short term at lower rates that are easily accessed if needed and some in longer term, where the rates are better but the capital is locked up for a fixed term and can't be retrieved without penalty.
To have money just sitting in the bank at today's low interest rates is to lose money. The inflation rate is higher.
"Be water my friend" - Bruce Lee
If we look at CIG's already complex setup to make use of government credits, tax relief and so forth in the several studios they have across the word, it is most likely they are investing funds whenever they can.
Are you really claiming that a certain amount of GBP today has the same buying power as the same figure 3 months down the road in an economy where the GBP is stronger?
Let's take a look at this recent trend, courtesy of Derek Smart (I'm sorry, try not to get a reaction):
https://www.oanda.com/fx-for-business/historical-rates?view=graph&base=USD"e=GBP&duration=90
Now, consider Ortwin's statement:
"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. 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."
So... they collect in USD and EUR, while their overhead is in GBP. Given that it looks like GBP is trending up over the past month or two, if this continues then it means one would get more GBP per USD today than 90 days from now. According to Ortwin, F42 wants to avoid converting other currencies into GBP. Remember, they are a UK company so their rebate is in GBP.
If the loan was in USD, and they will be repaying this 90 days from now from earnings in GBP, then yes it would make absolute sense to take it given GBP is trending up. However, it looks like this is the opposite of what is occurring, given Coutts is a UK bank. You say "F42 is getting injected with USD." Source, please?
Otherwise, the most reasonable answer for taking a loan like this would be to address cash flow problems, not "smart money management".
"The simple is the seal of the true and beauty is the splendor of truth" -Subrahmanyan Chandrasekhar
Authored 139 missions in Vendetta Online and 6 tracks in Distance
"We all do the best we can based on life experience, point of view, and our ability to believe in ourselves." - Naropa "We don't see things as they are, we see them as we are." SR Covey
Here's the exchange chart I'm using, since I could only see up to a month on the link you gave: http://www.xe.com/currencycharts/?from=USD&to=GBP&view=1Y
If you have a 90 day time frame, yes it looks like the Pound is weakening. If you take it over the past year, though, it's crazy volatile and even strengthened significantly in April, so a 90 day graph is incredibly misleading (Which is naturally why Smart latched onto it).
Notice the sharp downturn in the graph and the jagged performance over the past few months since then. Of course they don't want to be converting anything in GBP right now. This isn't about profit on exchange rates, it's about managing risk.
This is getting incredibly confusing, but I think Dr. Smart may have had the chart flipped:
https://www.oanda.com/fx-for-business/historical-rates?view=graph&base=GBP"e=USD&duration=90
As you say, the GBP is weakening vs USD in the most recent trend, not strengthening. In this scenario, taking a loan in GBP makes sense to me (I'd prefer to pay this back via earnings in USD 90 days from now).
...again, though, who knows what the timeframe is, and maybe it's more about risk management than prospecting, as you say.
"The simple is the seal of the true and beauty is the splendor of truth" -Subrahmanyan Chandrasekhar
Authored 139 missions in Vendetta Online and 6 tracks in Distance