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SCO Gets $100M Valentine

By Chris Maxcer LinuxInsider ECT News Network
Feb 15, 2008 10:43 AM PT

The SCO Group, a software technology and mobile services firm that focuses on Unix-based solutions -- but is perhaps best for its high-profile lawsuits against Novell and IBM -- has announced a US$100 million cash infusion from Stephen Norris Capital Partners (SNCP) that promises to yank the small Utah-based company out of bankruptcy.

SCO Gets $100M Valentine

In addition to SNCP, the financing would include SNCP partners from the Middle East, and it comes with a reorganization plan in which SNCP will take a controlling interest in the company -- and turn it into a private organization. SCO's board of directors has unanimously determined that this financing and plan of reorganization is in the best long-term interest of SCO and its subsidiaries, as well as its customers, shareholders, creditors and employees, SCO reported.

'An Exciting Future'

"Not only will this deal position us to emerge from Chapter 11, but it also marks an exciting future for our business," noted Jeff Hunsaker, president and chief operating officer of SCO operations. "This significant financial backing is positive news for SCO's customers, partners and resellers, who continue to request upgrades and rely upon SCO's Unix services to drive their business forward."

SNCP has developed a business plan for SCO that includes unveiling new product lines aimed at global customers. This reorganization plan will also let the company see SCO's legal claims through to their full conclusion, the company said.

"We saw a tremendous investment opportunity in SCO and its vast range of products and services, including many new innovations ready or soon to be ready to be released into the marketplace," noted Stephen Norris, managing partner for SNCP. "We expect to quickly develop these opportunities, and to stand behind SCO's existing base of customers and partners."

Widespread Skepticism

SCO has long asserted through legal claims and lawsuits that Linux infringes on its copyrights, and it's encountered widespread skepticism from the technology industry as well as the courts. The last major blow to the company came in August of last year when a judge, ruling in the SCO v. Novell case, found that Novell owned the disputed Unix copyrights. The court awarded Novell some summary judgments over various claims and denies SCO's claims.

A month after that judgment, SCO filed for bankruptcy, and in late 2007 SCO was delisted from the Nasdaq. Finally, earlier this week, the company announced it would lay off about 30 of its 115 employees. After all this, the obvious question is, what assets might SCO have that could be worth more than $100 million?

"They probably believe that they can reverse the judge's ruling on whether the ownership of the copyrights was required for SCO's business and thus trigger the copyright transfer to SCO," Mark Radcliffe, an attorney with DLA Piper and author of the Law & Life: Silicon Valley blog, told LinuxInsider.

"This will be hard, because generally appellate courts respect factual findings of lower courts," he added.

Rising From the Dead

"There are always margins to be had from the ruins of a wrecked company. Clearly, Norris Capital sees some value in SCO's future business model, but that value will only be realized outside and apart from any litigation," noted Jim Zemlin, executive director at The Linux Foundation.

"The SCO litigation has been like a bad horror flick and about as believable. This case has been going through the courts too long, and the facts remain the same. We hope that SCO's new investment is focused on the future and not rooted in the shock value of an old scary movie," he added.

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