SCO scoops $50m investment

By Matt Whipp

Posted on 17 Oct 2003 at 17:39

Investment firm BayStar Capital has bought options on some 2,953,000 shares of SCO common stock in a $50mn purchase.

In a conference call today, CEO Darl McBride said: 'The opportunity to build a war chest was too good to pass up.'

SCO said the cash will fill its coffers to the tune of $61mn and would contribute towards both growing its SCO's Unix business, with the development of its Web services SCOx arm, a refresh of its Unix server products and pursuing its IP claims through its SCOsource division.

The company has about-faced since May's earnings announcement - McBride said offers of investment had been turned down as SCOsource was pulling in the cash, and the option to not dilute shareholder value was the path to take. He justified the company's current decision, saying: 'It's easier to raise money when you don't need it,' and pointed to the fact that with SCO's stock riding high, the dilution of stock was much less significant than it would have been in May.

Lawrence Goldfarb, General Partner, BayStar Capital, said: 'BayStar Capital looks to invest in growth-oriented firms with strong management, substantial market opportunity and solid, comprehensive business plans, and we believe that all of those fundamentals are in place for SCO to succeed.'

The investment is private placement of non-voting Series A Convertible Preferred Shares. They are immediately convertible into common equity at a fixed conversion price of [$16.93] per share. The shares will pay no dividend for a year, and then 8 per cent per year thereafter, rising 2 per cent a year to a 12 per cent cap.

SCO's CFO Bob Dench said the investment would not alter the company's guidance.