It was a Hail Mary bet, but BayStar and the Royal Bank of Canada (RBC)
SCO has not been modest in selecting defendants, which include such deep pockets as IBM
Then, about a month ago, BayStar and RBC got jittery and demanded their money back. Why? Well, the investors wanted more experienced lawyers on the case.
Given that repayment of the investment would have been a disaster, SCO needed to act fast -- and did.
On Tuesday, SCO announced that it worked out a deal with BayStar (RBC previously sold its stake to BayStar) to buy out the initial investment. And the price was definitely attractive for SCO -- that is, $13 million in cash and $10 million in common stock. Basically, SCO now has a clean balance sheet (no more treacherous convertible preferreds).
SCO says that it has enough money to continue its lawsuit against IBM, as well as other players like Red Hat
BayStar used its restrictive investment as leverage to focus SCO on its legal strategy. So, investors now have full disclosure: SCO's success will not be from its underlying business, but by getting lucky at the roulette table of the American court system.
What are your thoughts on SCO Group's operating strategy? Share your opinion on the SCO Group discussion board.
Fool contributor Tom Taulli is the author of The EDGAR Online Guide to Decoding Financial Statements. He does not own shares in any of the stocks mentioned.