A private equity company has riden to SCO's rescue five months after the beleaguered company applied for Chapter 11 bankruptcy protection.
Stephen Norris & Co (SNCP) and unnamed partners in the Middle East have agreed to invest up to US$100 million in cash to finance a reorganisation plan.
Under the deal, which must be approved by the US Bankruptcy Court judge in Delaware who is reviewing the company's bankruptcy filing, SNCP would gain a controlling interest in the company and take it private.
Two notable clauses are present in a 15-page "Memorandum of Understanding" filed with the court by SNCP to outline the proposal: SCO CEO Darl C. McBride, who has led the company since 2002, would be required to "resign immediately" once the deal is completed, and SCO must "continue to pursue aggressively the company's claims in the Novell/IBM litigation and other pending litigation against AutoZone."
SCO has been on the defensive since 2003, when the company filed a $5 billion lawsuit against IBM, alleging that it improperly contributed some of SCO's Unix intellectual property for use in Linux. SCO then also sued Novell, charging that the company had falsely claimed to own the legal rights to Unix. Last August, SCO was handed a big defeat when a US District Court judge in Utah ruled that Novell was the owner of the Unix copyright. The judge also ruled that as a result, Novell could direct SCO to revoke its copyright infringement claims against IBM.
Under the proposed deal, the cash infusion will mean that SCO "is poised to emerge from Chapter 11 of the United States Bankruptcy Code in the coming year," according to the announcement. "The board of directors of SCO has unanimously determined that this financing and plan of reorganisation is in the best long-term interest of SCO and its subsidiaries, as well as its customers, shareholders, creditors and employees," the statement continued."
Jeff Hunsaker, president and chief operating officer of SCO Operations, said that the deal not only would allow the company to emerge from bankruptcy "but it also marks an exciting future for our business. 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."
A new business plan has been established for the company, "that includes releasing new product lines aimed at global customers. This reorganisation plan will also enable the company to see SCO's legal claims through to their full conclusion."
Stephen Norris, managing partner for SNCP, said that the company saw "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. We expect to quickly develop these opportunities, and to stand behind SCO's existing base of customers and partners."