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SCO and Baystar Strike a Deal

Posted by michael on from the know-when-to-fold-em dept.

comforteagle writes "As you'll no doubt recall, SCO financier wanted to cash-in on its stock because of how SCO was being run. It appears they've struck a deal. 'The SCO Group, Inc. today announced it has entered into an agreement with BayStar Capital II LP to repurchase and retire all 40,000 shares of Series A-1 Convertible Preferred Stock currently held by BayStar.'" Summary: Baystar and the Royal Bank of Canada invested $50 million in SCO in October 2003. In 6 1/2 months, they've now converted their investment to $13 million in cash and $13.7 million of common stock, for a loss of almost half their investment.

4 of 336 comments (clear)

  1. Wow by neilcSD · · Score: 5, Interesting

    This is really going to hurt SCO, really going to put a large dent in their legal warchest. Let's say SCO does run out of money and they are forced to drop their suits...what happens when someone else purchases their "patents" and starts the whole thing over again (hi, Microsoft)? I'd almost rather SCO see this to the end, as it appears that they have a penchant for shooting themselves in the foot.

  2. Actually a little less than half... by Sebby · · Score: 5, Interesting
    Since I've taken my money from RBC to another bank, mostly due to their involvment w/SCO.

    Their (even bigger) loss.

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  3. Apparently not. by ron_ivi · · Score: 5, Interesting
    Aparanetly not... According to Baystar, they're happy with SCO's cash management, and mangement of the litigation.

    Quoth the article:

    "...BayStar is extremely satisfied with SCO's current operating and cash management plans, new initiatives, management of the litigation, and plans for improving its business going forward," said Larry Goldfarb, managing general partner, BayStar Capital.

    Now if they're so happy, why are they buying their shares back?

  4. Poor, hoodwinked BayStar.... by Vancouverite · · Score: 5, Interesting
    Not only did they lose big bucks up front ($13 Mil back from an initial $20 mil + whatever they paid RBC for their shares), but they will be dumping this stuff for months!

    From the PR:

    The agreement includes a restriction on sales and dispositions by BayStar of the Company's common stock. BayStar may not exceed on any trading day, 10% of SCO's average daily trading volume on Nasdaq during the five trading days preceding such trading day. The agreement includes a mutual general release by the parties and has not required compensation to any outside agents.
    If Baystar is lucky, right now that's about 250,000 shares a day average, or 25,000 shares a day that they can sell.

    But, let's assume that they can get the sales up to 500,000 shares a day average, letting them sell 50,000 a day. With 2,846,004 shares to be sold, that means that Baystar, if they sold every day, would need 57 market days (about 11 1/2 weeks) to sell out... with 25,000 a day, you of course double that. This means that, if they could start selling next Monday, Baystar would be out of the stock around the First of September (around Thanksgiving if they sell at 25,000/day)

    Poor Baystar....

    NOT!

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