Lindon-based SCO, known for its lawsuits against IBM and others alleging they misused SCO's Unix code in the freely distributed Linux operating system, said Wednesday its deal to buy back stock from Baystar had closed.
The development ended a financing drama that began nearly a year ago when BayStar, along with the Royal Bank of Canada, provided $50 million to SCO. The money was widely criticized in the pro-Linux "open source" community as replenishing SCO's shrinking litigation war chest.
BayStar refused Wednesday to discuss the nature of its apparently now-settled disagreement with SCO. "All I can say is that BayStar and SCO have reached an agreement and the transaction has closed," BayStar spokesman Justin Meise said.
SCO spokesman Blake Stowell said when problems arose with the transaction last month, the company had put BayStar's money into an escrow account.
"Now they have contacted us and indicated they want to receive the money and their stock certificates," he added.
"BayStar is now a common shareholder. There are no more preferred stocks anywhere in SCO," Stowell said. "We will continue to work with BayStar, just like we do with all our common shareholders."
SCO's relationship with BayStar soured six months after its investment in the company. BayStar, blasting both SCO's management and Unix-heavy marketing strategy, demanded return of its $20 million portion of the loan.
In April, Royal Bank bailed out of its $30 million equity interest in the company, selling two-thirds of its preferred stock to BayStar and converting the rest to common stock.
In May, SCO had agreed to repurchase and retire all 40,000 shares of preferred stock then held by BayStar. The investor's holdings had a face value of $40 million, equivalent to almost all the cash SCO then had.
BayStar then agreed to let SCO settle for $13 million in cash and conversion of the remainder of BayStar's Series A-1 shares into 2,105,263 shares of common stock. That left SCO with an intact cash reserve sufficient to continue its ongoing Unix-Linux legal disputes.
Under the deal now in effect, BayStar will be restricted in how fast it can sell its common shares, which it obtained at $13 each. The agreement allows the investor to unload shares equivalent to 10 percent of the average trading volume for SCO of the previous week.
On Wednesday, the company's shares closed at $3.60, down 19 cents.