BayStar Cashes Out of SCO Stock

Kurt Wall writes "According to Yahoo! Finance, BayStar, the company that funded SCO to the tune of $50,000,000, and then later changed the terms of the deal, has requested that SCO redeem the 20,000 shares of preferred stock issued in return for the funding. The reason? BayStar states that 'SCO has allegedly breached Sections 2(b)(v), 2(b)(viii) and 3(g) of the Exchange Agreement.' Naturally, SCO thinks it has done nothing of the sort."

Comments

Why they'd be doing this now?

[Saven Marek]

Talk on the boards is that the breaches are due to SCO not revealing the entire story regarding their claimed 'ownership' of UNIX SysV. Notice SCO now states that UNIX is a registered trademark of The Open Group.

In any case, looks like you live by the sword you die by the sword. It was after all Darl who stated "Contracts are what you use against parties you have relationships with". None of this using contracts to clarify just what each other's purposes are, and being a record of an agreement, they're to be used as weapons. SCO's breaches are what will come bite them on the ass, and nothing will save them with a contract that they can't hide way back in the muddying of time. $20million worth of redeemed stock is $20million SCO can't use against Linux, Customers, Ex Customers or whoever else has tried to be nice to them in the past.

It's only a few hour's drive to Lindon from here. I wonder if I should go watch the fireworks.

Shak's nude anime gallery

Re:Why they'd be doing this now?

[peragrin]

And SCO is going to die by the sword. What is SCO going to do next take baystar to court?? The judge will put that money in a lien, and lock it down until the suit is over. Take away 2/3rd's of SCO cash and keep boise paid they will burn out of cash in 6 months. If they get a break in the court with IBM. If not the next few months will be fun.

It's been a Good Day.

Re:Why they'd be doing this now?

[Anonymous Coward]

Next? They'll Sue Baystar. Then they'll sue Boies.

Then when their stock finally tanks, they'll sue their own shareholders!

Re:Why they'd be doing this now?

[Otter]

A bit of clarification: these "breaches" sound like violations of a debt covenant. Typically, borrowers are required to maintain certain standards of total assets, current assets, debt coverage, things like that, and violating them voids the terms of the debt. Breaches aren't typically the sort of sleaziness, fraud or dishonesty most people here seem to be assuming took place.

Disclaimers:

1) I am not an investment banker.

2) I have no idea what the precise lending terms were; on the other hand, I'm confident that the people behind "talk on the boards" also have no idea.

Re:Why they'd be doing this now?

[Anonymous Coward]

It looks to me like Baystar is claiming

1. SCO lied about their status
2. SCO didn't disclose everything about their status
3. There was disparity between press releases and the truth

Sounds like what we knew all along...

(The sections that baystar claim have been breached are:-

2(b)(v)
(v) Original Purchase Agreement. Excluding the representations and warranties set forth in Sections 3(a), (b), (d), (e), (i), (y) and (z) of the Original Purchase Agreement, the representations and warranties of the Company set forth in Section 3 of the Original Purchase Agreement (the "Original Representations and Warranties") are each true and correct as of the Closing Date, in each case as if made on the Closing Date.

2(b)(viii)
(viii) Disclosure. All information relating to or concerning the Company and/or any of its Subsidiaries set forth in this Agreement or provided to the Purchasers in connection with the transactions contemplated hereby is true and correct in all material respects, and the Company has not omitted to state any material fact necessary in order to make the statements made herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred or exists with respect to the Company or its Subsidiaries or their respective businesses, properties, prospects, operations and financial conditions, which has not been publicly disclosed but, under applicable law, rule or regulation, would now be required to be disclosed by the Company in the Company's Annual Report on Form 10-K.

3(g)
(g) Press Release; Publicity. The Company shall issue a press release (the "Press Release") describing in reasonable detail the transactions contemplated hereby as soon as practicable on or after the date hereof, but in no event later than the commencement of the first trading day following the date hereof. The Press Release shall be subject to prior review and comment from BayStar Capital II, LP ("BayStar"). Within two days after the Closing Date, the Company shall file a Form 8-K with the SEC concerning this Agreement and the transactions contemplated hereby, which Form 8-K shall attach this Agreement as an exhibit to such Form 8-K (the "8-K Filing"). From and after the Press Release, the Company hereby acknowledges that no Purchaser shall be in possession of any material nonpublic information received from the Company, any of its subsidiaries or any of its respective officers, directors, employees or agents, that is not disclosed in the Press Release. The Company shall not, and shall cause each of its subsidiaries and its and each of their respective officers, directors, employees and agents not to, provide any Purchaser with any material nonpublic information regarding the Company or any of its subsidiaries from and after the Press Release without the express written consent of such Purchaser; provided, however, that a Purchaser that exercises its rights under Section 4(n) of the Original Purchase Agreement shall be deemed to have given such express written consent. No Purchaser shall have any liability to the Company, its subsidiaries or any of its or their respective officers, directors, employees, shareholders or agents for any such disclosure. Subject to the foregoing, neither the Company nor any Purchaser shall issue any press releases or any other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled, without the prior approval of any Purchaser, to make any press

PREFERRED Stock

[Serk]

Before anyone gets the wrong idea, plase note, these are PREFERRED shares, not the normal one's you see quoted prices on...

These shares value is set at $1000 each... so this is quite a big chunk out of SCO's warchest...

Happy day!

Re:PREFERRED Stock

[Hrrrg]

I wonder if this means that SCO will now sue Baystar?

SCO ON SALE!

[Anonymous Coward]

Woo, SCO's stock is down 10.56% already. What a great time for a shrewd investor to buy SCO stock at bargain prices!

Re:SCO ON SALE!

[GFW]

How much interest are you paying on the short position? SCOX is/was a "hard to borrow" stock. You should take the money and run at the point where diminishing further gains are outweighed by continuing interest.

So Very Sad.

[Volatile_Memory]

I'm weeping on the inside.

Rats

[shamir_k]

Always the first to leave a sinking ship

Watch it fall!

[SeanTobin]

Watch it fall in near-real time! Go go go! Ahhh... this makes my day :) At time of posting, last trade was 8.68. Also, check the trade volumes after the press release (at 1:45pm). People are paying attention.

The future for SCO

[eddy]

So what will happen? I say we're going to see a SCOX vs BayStar lawsuit. SCO likes lawsuits. They like to stall for time while talking shit to the press. It gives them time to dump stock gotten cheaply from options. We'll get more of that. Only this time, investor-types (people who matter as far as the stock is concerned) won't like it. Fucking around with your big investors? Now, that's something else compared to fucking around with a bunch of hippie nerds and IBM.

I assume the "SCO must have permission from BayStar to start lawsuits"-clause in the contract won't be a hindrance, since probably BayStar will start it :-)

If BayStar is able to get ~$20M back (20000 at $1000 plus interest and penalties), then maybe RBC want their part back... which would instantly kill SCOX dead, dead, dead.

suggested mod-limit: 3

Re:The future for SCO

[FatRatBastard]

According to an article on The Street one analyst didn't think BayStar would have much of a chance of getting their money back but this would make it incredibly difficult for SCO to raise any more money (not that they had anyone beating down their door to loan them money lately). By publicly asking for redemption over a broken clause I see this as BayStar's big, giant "FUCK YOU" to SCO.

I am altering the deal.

[sulli]

Pray I don't alter it any further.

SCO announced today

[Anonymous Coward]

That they would be suing BayStar for the sum of $50,000,000 for their decision to cease funding their lawsuits.

SCO requests specifics

[mflaster]

In SCO's press release:

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...

Gosh, making accusations, and not providing any specifics! That's horrible!!!!! I'm sure SCO is outraged.

Mike

Re:SCO requests specifics

[eddy]

This just in:

BayStar Capital II, L.P. today announced a program under which SCOX officers are allowed to learn about the BayStar charges. SCOX officers are only required to sign the dotted line in an NDA about an NDA to a letter about a contract, and they will learn everything they need to know[0].BayStar believes this is a very fair and balanced offer and that only TERRORISTS would decline such a fine offer.

[0] In addition, they will not be allowed to say anything about anything and may be asked to give BayStar money which they will then be legally required to do.

karma

[Anonymous Coward]

From SCO's Press release
"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"

Re:karma

[stevesliva]

"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"

I'm hoping Baystar provides hardcopy of all 20,000 shares and 20,000 copies of the Exchange Agreement and declares, "It's in there somewhere, we just don't know where yet!"

SCO now stands for

[Anonymous Coward]

SCO now stands for "Shit! Cash Out!!"

SCO: "Everything's fine, la la la..."

[Anonymous Coward]

Seriously, when the fuck did SCO hire the Iraqi Information Minister?

Re:MOD PARENT DOWN spam in .sig

[Anonymous Coward]

Do we want every post to have a advertisement in the .sig? I personally think that moderators should mod down any post with SPAM at the end.

Yeah right as you go and post a link to yours on the end.

Beware I'm about to DDoS your site for the next 24 hours. That'll learn ya!

Official loser

[tomhudson]

SCO once again makes the list of losers in trading today! At this rate, maybe it'll be number one at something by days' end.

A shame really.

[Picass0]

If we don't go to court to test the legality of the GPL in the SCO case, it means it will happen later... perhaps against someone who doesn't have their head up their ass.

Going to trial against SCO is a sure thing for IBM, and therefore good for Linux. IBM and Redhat would tear SCO a new one, and the GPL would have it's day in court against the mental midgits from Provo.

If SCO goes bankrupt, this (I assume) goes in a legal round file somewhere. Then we can just wait for Microsoft to come at us directly with an army of lawyers that dwarfs IBM.

Re:MOD PARENT DOWN spam in .sig

[khallow]

Watch out! He's got some sort of bot fighting back. Every time I flood the site, my link gets hammered.

Sections 2(b)(v), 2(b)(viii) and 3(g) of the ....

[Halo-]

To help out, I've summarized sections 2(b)(v), 2(b)(viii) and 3(g) of the Exchange Agreement:

2(b)(v) : Presumption of Correctness

2(b)(viii) : Failure to Pass the "Laugh Test" Clause

3(g) : General Asshattery Clause

Was Baystar investment a trojan horse?

[Optic7]

That's an awfully quick turnaround time for this "investment" to come back around and knock a nice size hole on the side of SCO...

Maybe it was IBM instead of Microsoft behind the Baystar investment? :)

Re:"Owner of the UNIX Operating System"

[FatRatBastard]

Funny that they are the ones announcing BayStar putting the pinch on them. Guess they want to put the "positive spin" on it, just like everything else...

That, and I suspect that if any insiders dumped a bunch of stock today without announcing it would be eligable for a perp walk.

Re:The future for SCO: Street.com article

[David Hume]

According to the Street.com article "BayStar Says SCO Breached Note":

"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 ."

SCO will certainly need lots of money if it wants to fight the likes of massive IBM, he noted. "I think they'll need all the $65 million they have in the bank to fund this fight. This is going to be a multi-year, very protracted lawsuit, if it's not dismissed."

(emphasis added) Thus, even if SCO eventually prevails over Baystar this may still sink SCO. SCO won't be able to obtain enough funding to battle IBM, et al.

Reminds me of that scene in star wars

[voss]

Lackey: Sir, there is potential flaw in our plan, shall I have the shuttle made ready?

Darl: What in our moment of triumph?

-----

Ibm: Ok redhat, Youre all clear now blow this thing so we can all go home

(Scene of SCO imploding)

(Fat guys with beards in Star Wars t-shirts
dancing in the streets)

Wrong way round

[Albanach]

I think this is the first recorded instance of the ship leaving the sinking rats

Re:The joy!

[Tibor the Hun]

I think the joke is on you man.

Have you ever seen penguins jump in the water? Those little fuckers are so good at sliding in, they hardly displace any water at all.

What Darl needs up his ass is an eServer.

The 45-day deadline is also coming up...

[DanTheLewis]

... where SCO has been ordered to:

1. To fully comply within 45 days of the entry of this order [NB: March 3 + 45 = April 17] with the court's previous order dated December 12, 2003. This is to include those items that SCO had difficulty in obtaining prior to the Court's previously ordered deadline of January 12, 2004.
2. As previously ordered, SCO is to provide and identify all specific lines of code that IBM is alleged to have contributed to Linux from either AIX or Dynix. This is to include all lines of code that SCO can identify at this time.
3. SCO is to provide and identify all specific lines of code from Unix System V from which IBM's contributions from AIX and Dynix are alleged to be derived.
4. SCO is to provide and identify with specificity all lines of code in Linux that it claims rights to.
5. SCO is to provide and identify with specificity the lines of code that SCO distributed to other parties. This is to include where applicable the conditions of release, to whom the code was released, the date and under what circumstances such code was released.

6. It's a tall order. I foresee a lot of coffee drinking and nail-biting this weekend, whether or not the smoking suitcase is full of evidence.

Re:MOD PARENT DOWN spam in .sig

[zulux]

What a looser... He's running OpenBSD 3.2 - just like me. He diden't apply the OpenSSH patches and I got right in. I'll just rm -r / [NO CARRIER]

SCO sues Baystar for breach of contract

[Anonymous Coward]

Come on we know it's coming so just have the newstory all ready to go.

here a fill in the blank form for it to help you along

_____ writes today SCO sued ____ for ____ and $____ in damages. SCO contends that ____ failed to _____ resulting in SCO ______. When reached for comment _________ declined to respond at this time due to pending _________ but released a press release stating "At this time _________ ."

IBM won't let it go that easily...

[Kjella]

If SCO goes bankrupt, this (I assume) goes in a legal round file somewhere. Then we can just wait for Microsoft to come at us directly with an army of lawyers that dwarfs IBM.

IBM was accused of not keeping their hands clean with contracts and licences. They will not rest until SCO's accusations have been completely and utterly discredited, even if it means flogging a dead horse. That they "ran SCO's war chest empty" simply won't do.

It has very little to do with the SCO case at all. IBM is relying on major contractors like military, government, major businesses selecting IBM because they are rock solid and trustworthy. That the data they entrust to IBM systems will be handled exactly as specified in contracts.

That, and I suppose some people in IBM would take a certain pleasure in doing it. But hey, if you can have both business and pleasure, why not?

Kjella

Re:MOD PARENT DOWN spam in .sig

[NotQuiteReal]

When I visit his site, all I get is HTTP Error 403 You are not authorized to view this page

He must really hate me since I appear to be blocked from viewing it -- but everyone else on this thread seem to be laughing till the spit milk out of their noses, based on all the funny moderation going on.

I feel left out!

Re:Rats leaving the ship

[Bronster]

To be fair, there is also the lion school of legal practice...fierce, brave, tenacious. Unfortunately the rats, vultures and sharks tend to dominate.

Yeah, it's such a pity that the actions of 95% of lawyers make the other 5% look bad.

Not only that.....

[kajoob]

but he has naked pictures of my wife too! He's a dead man!

Re:Not only that.....

[Anonymous Coward]

but he has naked pictures of my wife too!

At least you get 'em for free. I had to buy them.

With Apologies To Don MacLean

[red floyd]

A long long time ago
Darl can still remember
When Unix(tm) used to make him smile...
And he knew that in a few weeks
That he would sue those Linux(tm) geeks
And maybe prop the stock up for a while...
But IBM just wouldn't shiver
The AIX code they wouldn't deliver
Bad news on the newsrack
BayStar wants their cash back
I don't remember getting sad
When I heard how their stock crashed so bad
But I was laughing and oh so glad
The Day The SCO Group Died...

So we were singing
Bye, bye, Mr. Darl McBride...