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  1. #1

    BayStar wants to sell SCO stock, SCO says no.

    BayStar Capital is seeking to get back the $20 million it invested in the SCO Group, raising issues for SCO's expensive and controversial legal campaign that argues Linux infringes its Unix copyrights.

    BayStar sent SCO a letter Thursday "requesting that SCO immediately redeem BayStar's 20,000 shares of SCO's Series A-1 Convertible Preferred Stock," SCO said in a statement Friday. SCO disputes the basis of BayStar's request, that SCO breached terms of a Feb. 5, 2004, exchange agreement by which SCO exchanged one type of preferred stock BayStar owned for another.

    The move means at a minimum that SCO has more legal wrangling in its future, but it also raises the possibility that the Royal Bank of Canada, which chipped in $30 million alongside BayStar's investment in October, could follow suit.

    RBC is keeping its options open. "We haven't requested a redemption. We're reviewing the situation and will arrive at a decision shortly," said spokesman Paul Wilson.

    The news sent SCO's stock down 13 percent, or $1.25, to $8.41 in midday trading.

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

    However, "SCO does not believe it has breached any of the referenced provisions," SCO said, and therefore, "SCO does not believe it is obligated to redeem BayStar's shares."

    BayStar invested $20 million and the Royal Bank of Canada $30 million in an October transaction that has been instrumental to SCO's legal fight against Linux.

    BayStar spokesman Bob McGrath declined to comment further on BayStar's request.

    SCO has sued AutoZone, DaimlerChrysler and IBM in connection with its allegations that Linux, a widely used operating system, violates its Unix copyrights. Novell, an earlier owner of Unix, argues it still owns the copyrights, a matter that's the subject of another SCO lawsuit.

    In its most recent quarter, SCO spent $3.4 million on the legal case.

    The investment has been crucial to raise cash for SCO's operations. "A year ago we had (about) $6 million, and now we have $60 million--$50 million of that coming in through the investment. We have a war chest to defend our rights and to fight our claims in the courtroom," Chief Executive Darl McBride said in a March interview.

  2. #2
    Join Date
    Jun 2003
    FT Worth, TX
    **** SCO and the way they do business. I think BayStar should sue them since its their money and investment and should have every right to withdraw their stock. Is what they are doing illegal?
    Kerry Jones

  3. #3
    I think it is but we'll let the esteemed US courts rule on that *cough*

  4. #4
    Join Date
    Apr 2002
    Hollywood, CA
    what goes around comes around....

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