In a surprise announcement, The SCO Group Inc. on Tuesday announced that it has entered into an agreement with BayStar Capital II LP to settle their financial squabbles. The move appears to give a green light to SCO"s continuing battle for Unix copyright claims while maintaining its development efforts. The SCO Group Inc. will repurchase and retire all of Series A-1 shares currently held by BayStar Capital II LP. The shares, which have a face value of $40 million, will be retired through a payment of $13 million in cash and the issuance of 2,105,263 shares of common stock.
BayStar Capital had originally invested in SCO to help fuel SCO"s Linux litigation with Microsoft"s encouragement. Since then, the investment house and the Lindon, Utah Unix firm have squabbled over SCO"s future. BayStar caught SCO by surprise in April by claiming that SCO had violated several clauses of its agreement with BayStar. Later, however, Bob McGrath, then BayStar"s spokesperson, said that SCO must change three things to avoid BayStar pulling its investment out of the company. First, "the management team at SCO must be strengthened and enhanced with executives who are experienced in litigation issues and in dealing with those issues from a public-company standpoint to get the best possible return," he said at the time.