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SCO announces reorganization plan - $100 M from SNCP & "partners from the Middle East", to go private - Updated
Thursday, February 14 2008 @ 01:04 PM EST

Here's the press release, titled "The SCO Group Announces Reorganization Plan to Include $100 Million Financing by Stephen Norris Capital Partners".

It seems Stephen Norris Capital Partners "and its partners from the Middle East" have fallen in love with SCO's "vast range of products and services":

"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," said 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."

Hahahaha. Maybe this is the key?

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

That's code, I think, for "this will enable the company to continue to attack Linux".

Update 3: A collection of news articles here on ComputerWorld.

The press release is a bit coy. Here's more detail:

Mr. Norris acted as a principal financial advisor to Prince Al-Waleed bin Talal Al Saud of Kingdom Holding Company, in structuring and negotiating the re-capitalization of Citibank, which returned over $15 billion in profits on about $590 million of equity invested....

Since 1997, Mr. Norris, and certain members of his team, have worked on a number of investments including real estate investments in Europe and the United States. They were involved in amongst others the privatization of Thompson CSF, the recapitalization of Suez, the acquisition of portions of Credit Foncier's real estate portfolio in Paris by the German firm of IVG, the formation of Nomura's (London) bid for a Dutch mortgage bank, the offer by a major Saudia Arabian investment firm for Lamborgini in Italy, and the formation of a bid by Leucadia International's for the Labouchere Bank in Holland. He also negotiated and structured investments in Synxis Corporation, which was backed by George Soros and Mr. Norris, and MARC Global Holdings.

Update: It seems Bill Gates has a friend in this picture. The two announced another deal last year, according to this IHT article, "Four Seasons Hotels agrees to bid from Gates and Alwaleed":

Gates and Alwaleed have collaborated for at least two years. After attending a dinner at Gates's home in Bellevue, Washington, in early 2004, Alwaleed agreed to explore ways to assist Microsoft's expansion in Saudi Arabia.

So, there's Waldo.

SCO has now filed a number of documents in bankruptcy court. The Memorandum of Agreement on the new proposed deal is the one you want, and it's #346 Exhibit A. If anyone has the chance to OCR it for me, I'd appreciate it. Here are all the filings:

343 - Filed & Entered: 02/13/2008
Motion to Amend (B)
Docket Text: Motion to Amend Debtors' Motion (1) to Amend Order Authorizing Payment of Accrued Benefits; and (2) for Authorization to Pay Accrued Benefits to Employees Terminated After Entry of Order Filed by The SCO Group, Inc.. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 2/29/2008. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service and Service List) (O'Neill, James)

344 - Filed & Entered: 02/13/2008
Motion to Authorize (B)
Docket Text: Motion to Authorize Debtors' Motion for a Determination that Incentive Bonuses for Quarter Ending October 31, 2007 were Paid in the Ordinary Course of Debtors' Business and for Continuing Authority to Pay Ordinary Course of Business Incentive Bonuses Filed by The SCO Group, Inc.. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 2/29/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Proposed Form of Order # (4) Certificate of Service and Service List) (O'Neill, James)

345 - Filed & Entered: 02/13/2008
Motion to Seal
Docket Text: Motion to Seal. Debtors' Motion to Present Evidence and Testimony Related to the Debtors' 2007 Incentive Program Under Seal [Related Docket No. 344] Filed by The SCO Group, Inc.. Hearing scheduled for 3/7/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 2/29/2008. (Attachments: # (1) Notice # (2) Proposed Form of Order # (3) Certificate of Service and Service List) (O'Neill, James)

346 - Filed & Entered: 02/14/2008
Motion to Approve (B)
Docket Text: Motion to Approve Debtors' Motion To Approve Settlement Compensation Or Sale Compensation And Expense Reimbursement to Plan Sponsor Filed by The SCO Group, Inc.. Hearing scheduled for 4/2/2008 at 02:00 PM at US Bankruptcy Court, 824 Market St., 6th Fl., Courtroom #3, Wilmington, Delaware. Objections due by 3/26/2008. (Attachments: # (1) Notice # (2) Exhibit A # (3) Proposed Form of Order) (O'Neill, James)

347 - Filed & Entered: 02/14/2008
Operating Report
Docket Text: Amended Debtor-In-Possession Monthly Operating Report for Filing Period December 2007 for SCO Operations, Inc. Filed by The SCO Group, Inc.. (Attachments: # (1) Certificate of Service and Service List) (Werkheiser, Rachel)

348 - Filed & Entered: 02/14/2008
Certificate of Service
Docket Text: Certificate of Service Regarding Debtors' Motion to Approve Settlement Compensation or Sale Compensation and Expense Reimbursement to Plan Sponsor (related document(s)[346] ) Filed by The SCO Group, Inc.. (Werkheiser, Rachel)

It may take a couple of minutes for all of the documents to resolve. It looks from this 13G filing that the Cayman Island folks, Chesapeake Partners Management, have made their exit. And Maureen O'Gara is now reporting that the goal is to tax Linux, including aggressively pursuing the AutoZone case:

We’re talking about people who can buy all the legal talent in the world who’ve looked at SCO’s evidence against IBM and Novell and Linux and think that – despite all the monumental setbacks – the case is still eminently winnable – and if not the case that’s filed then a new case they’ll file.

People who, if they do win, won’t just take IBM and Red Hat and Novell to the cleaners, they won’t have a bit of compunction or an ounce of political correctness about demanding a SCOsource tax from every Linux user on the globe....

SCO going private will give the Groklaw crowd one thing it’s always wanted – SCO CEO Darl McBride out.

Although McBride reportedly put this deal together, he’s too much of lightening rod to stay once the deal is done. He’s unlikely to go far; he knows too much. Maybe he’ll spend his idle hours sussing out who Groklaw really is.

Has the system really become this corrupt? Incidentally, she is quite wrong about Groklaw yearning for McBride to be out. He was a lot of fun to write about. And the meanness isn't on this side. So, don't dump him overboard on our account. I would greatly prefer that he remain at the helm. For us, it's never been about McBride. The article is here, http://dotnet.sys-con.com/read/502009.htm if you must.

Update 2: Remember the York deal? The headlines all said it would fly, but it didn't. This is a proposed deal, one that must be approved by the bankruptcy court. That may or may not happen. Given the O'Gara piece and the friendship/business connection to Microsoft, I suspect the EU Commission might even be interested. So let's just wait and see. Meanwhile, this is the funniest comment I've seen so far, from Slashdot:

Only thing left... (Score:5, Funny)
by WarJolt (990309) on Thursday February 14, @04:53PM (#22426592)
After a nuclear holocost the only thing left will be cockroaches, twinkies and SCO. If you chop off the heads of SCO lawyers they continue to live for a week. Just when you think they're dead those tiny little litigating arms start moving again.
Update 4: A bit more on the the Prince, including a picture, on Forbes.

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

The SCO Group Announces Reorganization Plan to Include $100 Million Financing by Stephen Norris Capital Partners

Investment Designed to Take SCO Private and Positions it to Emerge from Chapter 11 with a Strong Financial Future for SCO Customers, Partners and Resellers

LINDON, Utah, Feb. 14 /PRNewswire-FirstCall/ -- The SCO Group, Inc., traded over the counter in the (Pink Sheets: SCOXQ - News), a leading provider of UNIX® software technology and mobile services, today announced that Stephen Norris Capital Partners ("SNCP") and its partners from the Middle East have agreed to provide up to $100 million to finance a plan of reorganization for The SCO Group Inc. ("SCO"). As part of the financing, SNCP will take a controlling interest in the company, while taking it private. As a result, SCO is poised to emerge from Chapter 11 of the United States Bankruptcy Code in the coming year. The Board of Directors of SCO 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.

"Not only will this deal position us to emerge from Chapter 11, but it also marks an exciting future for our business," said 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 enable the company to see SCO's legal claims through to their full conclusion.

"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," said 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."

About SCO

The SCO Group (Pink Sheets: SCOXQ - News) is a leading provider of UNIX software technology and mobile services. SCO offers UnixWare for enterprise applications and SCO OpenServer for small to medium businesses. SCO's innovative and reliable solutions help customers grow their businesses everyday. SCO owns the core UNIX operating system, originally developed by AT&T/Bell Labs and is the exclusive licensor to UNIX-based system software providers. The Me Inc., product line focuses on creating mobile platforms, services and solutions for businesses and enhances the productivity of mobile workers.

Headquartered in Lindon, Utah, SCO has a worldwide network of resellers and developers. SCO Global Services provides reliable localized support and services to partners and customers. For more information on SCO products and services, visit http://www.sco.com.

SCO and the associated logos are trademarks or registered trademarks of The SCO Group, Inc. in the U.S. and other countries.

About Stephen Norris Partners

Stephen Norris & Co. Capital Partners, L.P. is a private equity investment partnership formed to (i)"co-invest" alongside well established and successful private equity and leveraged buyout firms, (ii) take advantage of the business experience and relationships of its Investment Committee, including Steve Norris' long-standing relationships and substantial private equity experience.

Mr. Norris co-founded The Carlyle Group, a private equity and LBO firm in Washington, D.C, where he served as a founder and managing director until 1995. During his tenure in the investment business, Mr. Norris has made, directed or participated in over 125 leveraged buyouts, venture capital and real estate equity investments totaling more than $6.0 billion, and yielding an average annual internal rate of return (IRR) of over 38%. Mr. Norris structured and negotiated investments over $1.0 billion on behalf of a prominent Middle Eastern investor in Citicorp, Euro Disney, and the Four Seasons Hotel Company. These investments have returned well over $10 billion. In 1990, Mr. Norris was appointed by former President George H.W. Bush and confirmed by the U.S. Senate as one of the five members of the $68 billion Federal Retirement Thrift Investment Board. During his tenure, Mr. Norris successfully advocated for the right of Federal employees to allocate a greater portion of their savings to public equities.

Mr. Norris' partner, Mark Robbins has extensive experience in structured finance and private equity as co-founder and managing partner of Peninsula Advisors. Mr. Robbins has managed and originated over $1.2 billion in private placements. Mr. Robbins has developed and engineered structured investments, business valuation models and diversified financial products in excess of $10 billion. Mr. Robbins has served as Investment Director and lead negotiator with several leading financial institutions.

Forward Looking Statements

The statements contained in this press release regarding (i) the transactions contemplated in the memorandum of understanding and the Company's plan of reorganization, and (ii) the contemplated benefits of the Company's plan of reorganization for customers, partners, shareholders, employees, others, (iii) the Company's business plan regarding new products and services and the pursuit of its legal claims (iv) the expectations of SNCP with respect to the Company and its prospects (v) bankruptcy court processes and approvals respecting the company's plan of reorganization, and (vi) other statements that are not historical facts are forward-looking statements and are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are subject to risks and uncertainties. We wish to advise readers that a number of important factors could cause actual results to differ materially from historical results or those anticipated in such forward-looking statements. These factors include, but are not limited to developments with respect to the negotiation of definitive agreements with SNCP, confirmation of a plan of reorganization, the outcomes and developments in our Chapter 11 case, court rulings in the bankruptcy proceedings, the impact of the bankruptcy proceedings or other pending litigation, developments in our litigation, our cash balances and available cash, continued competitive pressure on the Company's operating system products, which could impact the Company's results of operations, adverse developments in and increased or unforeseen legal costs related to the Company's litigation, the inability to devote sufficient resources to the development and marketing of the Company's products, including the Me Inc. mobile services and development platform, and the possibility that customers and companies with whom the Company has formed partnerships will decide to terminate or reduce their relationships with the company. These and other factors that could cause actual results to differ materially from those anticipated are discussed in more detail in the Company's periodic and current filings with the Securities and Exchange Commission, including the Company's Form 10-K for the fiscal year ended October 31, 2007, and future filings with the SEC. These forward-looking statements speak only as of the date on which such statements are made, and the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date.


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