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RBC Makes Up Its Mind
Friday, May 07 2004 @ 02:33 PM EDT

Royal Bank of Canada has notified SCO it has elected to convert 10,000 shares of SCO's Series A-1 Convertible Preferred Stock it currently holds into a total of 740,740 shares of SCO's common stock. Further, it has sold 20,000 shares of Series A-1 stock to BayStar so that "after completion of the conversion, Royal Bank of Canada will have no equity interest in SCO other than the shares of common stock it receives from the conversion."

Statement from RBC:

"RBC spokesman Paul Wilson confirmed the transactions but declined to detail the bank's motives other than saying, 'It's a business decision.'"

More media coverage here. Here is a BayStar statement by Bob McGrath:

"RBC's move could now give BayStar more economic clout. McGrath declined to discuss the terms of the company's purchase of the additional A-1 shares or to offer details on which party initiated the deal.

"'The timing and price of our purchase of RBC's holdings in SCO presented a strategic and financial opportunity for BayStar and its investors,' he said, in a prepared statement.

According to Stacey Quandt, principal analyst of Quandt, 'RBC probably went into the deal as an investment, and now they appear to have lost confidence in SCO's ability to win its case, so they've decided to cut their losses.'"

A new 8K reflecting the event is here. Here is the press release.

**************************

The SCO Group Receives From Royal Bank of Canada Notice of Conversion and Transfer of Shares of Series A-1 Convertible Preferred Stock

Friday May 7, 2:00 pm ET

LINDON, Utah, May 7 /PRNewswire-FirstCall/ -- The SCO Group, Inc. ("SCO") (Nasdaq: SCOX - News), a leading provider of UNIX-based solutions and the owner of the UNIX operating system, received on May 5, 2004 notice that Royal Bank of Canada has elected to convert 10,000 shares of SCO's Series A-1 Convertible Preferred Stock it currently holds into a total of 740,740 shares of SCO's common stock. The conversion will occur as permitted under SCO's Certificate of Designation, Preferences and Rights relating to the Series A-1 stock. The Series A-1 stock was purchased at a price of $1,000 per share, and will be converted to common stock based on a conversion price of $13.50 per share.

Additionally, Royal Bank of Canada informed SCO that it has sold 20,000 shares of Series A-1 stock to BayStar Capital II, L.P., which currently also holds shares of Series A-1 stock. After completion of the conversion, Royal Bank of Canada will have no equity interest in SCO other than the shares of common stock it receives from the conversion, and BayStar Capital II, L.P. will be the sole remaining holder of outstanding shares of Series A-1 stock.

About SCO

The SCO Group (Nasdaq: SCOX - News) helps millions of customers in more than 82 countries to grow their businesses with UNIX business solutions. Headquartered in Lindon, Utah, SCO has a worldwide network of more than 11,000 resellers and 4,000 developers. SCO Global Services provides reliable localized support and services to all partners and customers. For more information on SCO products and services visit http://www.sco.com.

SCO and the associated SCO logo are trademarks or registered trademarks of The SCO Group, Inc. in the U.S. and other countries. UNIX is a registered trademark of The Open Group in the United States and other countries. All other brand or product names are or may be trademarks of their respective owners.


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