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…”