BayStar wants to dump investment in SCO [my title]

Yahoo Finance ^ | April 16 2004 | The SCO Group, Inc.

[antiRepublicrat]

The SCO(R) Group, Inc. Receives Request From BayStar Capital II, L.P. to Redeem Shares of Series A-1 Convertible Preferred Stock Friday April 16, 1:45 pm ET

LINDON, Utah, April 16 /PRNewswire-FirstCall/ -- The SCO Group, Inc. ("SCO") (Nasdaq: SCOX - News), the owner of the UNIX operating system, received a letter on April 15, 2004 from BayStar Capital II, L.P. requesting that SCO immediately redeem BayStar's 20,000 shares of SCO's Series A-1 Convertible Preferred Stock. The letter asserts that BayStar is entitled to the redemption of its shares under Article VII.A(vii) of the Certificate of Designation, Preferences and Rights of the Series A-1 Convertible Preferred Stock because SCO has allegedly breached Sections 2(b)(v), 2(b)(viii), 2(b)(viii) and 3(g) of the Exchange Agreement dated February 5 2004 among SCO, BayStar and Royal Bank of Canada, which also holds shares SCO's Series A-1 Convertible Preferred Stock.

BayStar's letter did not provide specific information regarding SCO's alleged breaches of the Exchange Agreement. SCO is attempting to obtain specific information from BayStar and is evaluating its obligations and options with respect to the redemption notice. However, SCO does not believe it has breached any of the referenced provisions of the Exchange Agreement. As a result, SCO does not believe it is obligated to redeem BayStar's shares of Series A-1 Convertible Preferred Stock

[antiRepublicrat]

They're jumpin' ship on SCOtanic!

[antiRepublicrat]

BTW, should have warned, it's an SCO press release, and Ionly cut off the standard trailer text of the article, so no reason to go to the full one.

Still this is good, since it even looks bad with a press release whitewash.

[antiRepublicrat]

Ping for the list

[BlazingArizona]

They're jumpin' ship on SCOtanic!

SCOX closed down over 12% today.

[Utilizer]

They are ***NOT*** "the owner of the UNIX operating system"!!!

[justlurking]

Another article on ZDNet:

http://zdnet.com.com/2100-1104-5193661.html

Buried in there is the reason that Baystar is trying to cash out:

BayStar said SCO violated provisions governing disclosure of information about SCO and publicity of the exchange agreement.

[glorgau]

It's a "vote of confidence" in SCO's management. Not.

[justlurking]

A link to the Baystar-SCO exchange agreement:

http://i.i.com.com/cnwk.1d/pdf/ne/2004/sco-baystar.pdf

[justlurking]

Another article from TheStreet.com:

http://www.thestreet.com/tech/software/10154573.html

"I look at this as bad news for SCO," said Dion Cornett, an analyst for Decatur Jones Equity Partners - Soleil. "I don't think BayStar is going to be very successful in getting their money back. It's very difficult for a private equity investor to force a redemption on a company that doesn't want to redeem. But it makes it very difficult for SCO to raise future financing."

[TechJunkYard]

Groklaw coverage here: http://www.groklaw.net/article.php?story=20040416151214305

So what if RBC does the same thing on Monday? Could bankruptcy court be on the horizon for $CO?

[rdb3]

The Penguin Ping.

Wanna be Penguified? Just holla!

Click me!

Got root?

[TechJunkYard]

SCO has a shareholder meeting scheduled for next Tuesday 2004/04/20.

What perfect timing!

[Ernest_at_the_Beach]

This may be closing down fast!

[D-fendr]

"BayStar's letter did not provide specific information regarding SCO's alleged breaches… SCO is attempting to obtain specific information from BayStar…

Other foot, meet shoe; shoe, other foot.

[antiRepublicrat]

Like you've probably heard, BayStar and RBC may not be able to get their money back without a court battle. That would be interesting because SCO would be using their own money to fight against them.

But if that starts, nobody else will give SCO anymore money. SCO will only have their current cash to complete their IBM, Novell, Red Hat, BayStar and RBC lawsuits (plus some are hoping that the copyright holder of nmap may sue SCO if it continues to ship nmap with its products). SCO doesn't have much else of an income stream, and its one SCO Linux licensee is already publically regretting that decision, likely meaning no more will happen.

I think IBM may just buy UNIX at the bankrutpcy fire sale.

[antiRepublicrat]

They are the owner of the UNIX business. I guess some people get confused, especially SCO.

[TechJunkYard]

Next week should be an interesting week. Not only will everybody be looking to see what RBoC does, we have the shareholder meeting Tuesday, and $CO's 2nd deadline to identify, with specificity, the lines of code copied from SysV to Linux and the lines of code in Linux that $CO thinks it holds rights to, was today.

I wonder if they done good?

BayStar and RBC may not be able to get their money back without a court battle.

Baystar is going to have to fight to get the money back. That will definitely send a message to all of the other investment funds and banks, and $CO will get no more funding unless Microsoft or Canopy stuff it directly into Darl's pocket. And I'd bet that Baystar et al will shy away from future Microsoft "referrals".

I think IBM may just buy UNIX at the bankrutpcy fire sale.

I think we're still a long way away from that day. Even if $CO pays up, or if the $20M is escrowed by a court, $CO still has ~$40M to play with. If RBC follows in Baystar's footsteps, then it's gonna get really tight. Boies and the boys don't do pro bono, and the stock shares they were partially paid with are gonna lose value PDQ. It's gonna be fun to watch though, fer sure.

But I hope $CO doesn't corkscrew into the ground too quickly. I really want to see IBM mop up the floor with these guys. And I suspect that Canopy is going to end up with most of $CO's assets.

[antiRepublicrat]

2nd deadline to identify, with specificity, the lines of code copied from SysV to Linux and the lines of code in Linux that $CO thinks it holds rights to, was today.

Extended. It appears to be a deal between SCO and IBM -- SCO gets more time to produce (or more likely, come up with excuses as to why they can't) and IBM gets more time to answer SCO's motion to extend the whole process by 6+ months.