Acer converts convertible loan to Starbreeze into shares.
https://se.investing.com/news/stock...rtering-av-konvertibellan-i-starbreeze-135871
The loan/bond was $7 million in 2016 and the conversion rate at the time fixed at ~$1.7 per share (close to the share price at the time) --- for simplicity SEK converted to US$ at a rate of about 10:1
That's of course a terrible deal for Acer, because the current shareprice is $0.08. They got 4 million class B shares, which is about 1.3% of the company (it has 329 million shares outstanding).
The shareprice jumped 50% after it was announced.
The article also says Starbreeze will continue business operations and the reconstruction period has been prolonged until June 2019.
So what does this mean for SS3?
(1)
The Starbreeze share jumped by 50% when the conversion was announced, because it wiped out $7 million of debt. When Starbreeze annouced that they are selling back SS3 to OS on Feb 11, the share price didn't move at all, although almost the same amount of money is at stake (Starbreeze disclosed they invested about $7 million in SS3 so far).
My reading is that the market doesn't expect that the $7 million will ever be paid back. Otherwise, the shareprice should have jumped up that day, because $7 million are coming in (and the remaining $5 million won't have to be spent on SS3). Everyone knows that after the cancellation of the SS3 deal, OS will be bankrupt soon and won't pay back a penny.
If OS was publicly listed, the shareprice would be zero. The only thing that'll keep them afloat for the next few weeks is the $3.5 million their owners provided in August 2018.
(2)
That also tells us Starbreeze's decision was not likely driven by the prospect of getting back the $7 million - they know these are sunk costs.
They cancelled the deal because they did not want to pay the remaining $5 million, because SS3 is a train wreck like UA that is going to bust its budget and is not going to release any time soon.
After almost two years of development OS has 3 screenshots and a 30-second trailer for SS3. They are desparately searching for a new publisher, but they have nothing else to show.
It was funny when the first abysmal pre-reviews on UA came out (Ars Technica etc.) last summer that said it would take at least a year to finish the game and the UA Beta was released a little later, the OS forum went bust with speculation about OS holding back progress and that they aren't showing what they actually have to surprise people at launch. It all turned out to be BS.
OS had nothing other than the broken Beta. For SS3, they don't even have an alpha. They have nothing.
(3)
Starbreeze isn't going out of business. In the reconstruction period, they are continuing both game development and their publishing business.
We’re now focusing the business towards a portfolio consisting of a mix of internally developed games and publishing titles.
https://www.starbreeze.com/2018/12/...ess-internal-game-development-and-publishing/
They didn't cancel the SS3 deal because they desparately need the money. They could have sticked to the project and scrambled up the remaining $5 million. They are actually investing in their publishing business with other cooperation partners (e.g., Pay Day).
https://www.starbreeze.com/2019/02/...es-with-starbreeze-on-new-payday-mobile-game/
So why did they abandon a "more-than-half-way-completed" project in which they poured $7 million already which they know they are never getting back? Because the money was wasted. They don't believe in SS3 anymore, and they know everything about the real state of SS3.
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