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Sun Baked
May 8, 2004, 09:50 PM
Bank cuts financial tie to SCO (http://www.sltrib.com/2004/May/05082004/business/164463.asp)

By Bob Mims
The Salt Lake Tribune

With a thud heard round the Linux world, the Royal Bank of Canada on Friday bailed out of its $30 million equity interest in Lindon-based SCO Group in a move that came three weeks after partner BayStar Capital demanded return of its own $20 million loan to SCO.

RBC sold two-thirds of its 30,000 preferred Series A-1 SCO shares to BayStar. The price was not revealed, but the deal doubled BayStar's stake in the Utah company to about $40 million.

That tightens Larkspur, Calif.-based BayStar's grip on SCO, which so far has refused to redeem BayStar's original 20,000 preferred shares, or meet demands for changes in management and marketing focus as terms for leaving its money in place...

...RBC-BayStar's combined $50 million infusion has been critical to maintaining SCO's ongoing federal lawsuits against IBM and others over rights to Linux seen as a challenger to Microsoft's long-dominant Windows.

Without the money, it is questionable whether SCO could continue its litigation. In Salt Lake City's U.S. District Court, the company seeks a minimum of $5 billion and maximum of $50 billion from IBM, SCO claims its proprietary Unix code was illegally imported into Linux-related products Big Blue distributed.

Open-source advocates, noting the struggles of the company they have reviled since it first sued IBM in March 2003, had gloomy predictions for SCO's future.

"SCO's Unix business is dead. It is a jalopy next to a Porsche [and] there's no way to salvage it without using Linux," said Linux developer spokesman Bruce Perens. "But [SCO has] burned that bridge quite thoroughly. No one in Linux will ever talk to SCO again."

Added Eric Raymond, a co-founder of the Open Source Initiative: "SCO has pissed off so many different outfits that if their headquarters were to be slagged down by a UFO death beam tomorrow, nobody would be a bit surprised," he said.