Update: PR/NewsForge: Royal Bank of Canada Requests Conversion of Stock

The SCO Group, Inc. 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.

NewsForge: Major SCO Group Investors Reposition Stock Holdings

"In opting for the stock transfer, the Royal Bank is accepting a 50 percent loss in its investment of only seven months ago. In exchange, it gains a measure of voting power regarding the future strategic direction of the company. Before today's announcement, there were 14,415,000 outstanding common shares of SCOX. RBC's stake of 740,740 shares works out to a bit more than 5 percent ownership.

"A holding of that size, however, is probably not enough to affect direct change in SCO Group management, as has been called for by BayStar..."

Complete Story

Related Stories:

• TechNewsWorld: The Mystery of BayStar, Microsoft and SCO(Apr 28, 2004)
• Computer Business Review: SCO's Problems Could Get Worse Before They Get Better(Apr 22, 2004)
• ZDNet: BayStar: SCO Needs New Management(Apr 22, 2004)