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SCO makes peace with BayStar

Investor backs off backing off

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The smart choice: opportunity from uncertainty

With a little cash, The SCO Group has mollified one of the two major investors who bought into the company's legal strategy last year, only to get cold feet this year. BayStar Capital invested $20m in SCO in the form of Series A stock last fall, and recently acquired the $20m worth of stock acquired by the other major backer, the Royal Bank of Canada, after RBC pulled out.

In April, BayStar declared that SCO had breached three sections of the agreement and said it wanted its money back. From today's settlement, it doesn't appear to have succeeded. The two companies have converted the Series A stock into $13m worth of ordinary stock. BayStar receives $13m and two million ordinary shares. BayStar also revealed restrictions in the October agreement (renegotiated in February) on dumping SCO stock which may have played a decisive part in the negotiations. BayStar also relinquished voting rights and the opportunity to be on the SCO Group's board.

"After productive and substantial discussions with SCO's management team, board of directors and legal team, 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 BayStar CEO Larry Goldfarb in a canned statement.

SCO Group stock finished the day 38 cents down, a fall of seven per cent on the day. ®

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