Canadian bank backs away from SCO (News.com) [LWN.net]

News.com reports that the Royal Bank of Canada has sold the bulk of its investment in SCO to BayStar, which is currently trying to redeem its stake. "'The timing and price of our purchase of RBC's holdings in SCO presented a strategic and financial opportunity for BayStar and its investors,' a BayStar representative said, declining to discuss the motivation or terms of the sale."

Update: Interestingly, RBC has converted the remainder of its holdings into common stock at a rate of $13.50/share - over twice the current market price. One might conclude that RBC has had enough of this particular game.

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Canadian bank runs away from SCO

Posted May 8, 2004 4:52 UTC (Sat) by hamjudo (subscriber, #363) [Link]

After the conversion, RBC's mystery client will (briefly) own just under 5% of SCOX common stock. RBC couldn't convert more shares to common stock without crossing the 5% level. There is a lot less privacy for entities that own more than 5%.

If RBC's client is lucky, those shares of common stock will sell for something close to today's close of $5.99/share, in which case, they will "only" lose 55% of that part of their investment. More likely, the large sale will drive down the price of SCOX stock, and they will lose much more.

We don't know how much BayStar paid RBC for the prefered shares. People seem to assume it was a significant amount of money. There aren't many entities that would want the preferred shares at any price. BayStar probably bought the rest of RBC's SCOX preferred shares for pennies on the dollar.

Canadian bank runs away from SCO

Posted May 8, 2004 23:27 UTC (Sat) by welinder (guest, #4699) [Link]

There's no reason why they couldn't have sold beforehand, for example two weeks ago or way back when the price was up near 20. They were in fact dropping hint about being thusly hedged.

Canadian bank runs away from SCO

Posted May 10, 2004 13:39 UTC (Mon) by ironhacker (guest, #11389) [Link]

If the RBC "mystery client" had any brains, they would have shorted the stock at somewhere near $13.50. If they had NOT shorted the stock, there is no reason to let it slide from $20 all the way down to $6; the ejection handle would have been pulled at least two months ago. The loss of at least $7.50 per share has to be made up by one of the following factors:

1. Microsoft's alleged "We'll make up for any losses" program.
2. Shorting the stock (self-service version of option 1 above)
3. Microsoft's willingness to eat the loss directly (if they are the mystery client)
4. P.T. Barnum theory on the separation of fools and their money.

Canadian bank backs away from SCO (News.com)

Posted May 9, 2004 17:16 UTC (Sun) by patriot (guest, #14594) [Link]

The Canadians should be charged with treason. First they refuse to help in the Iraq war and now they try to undermine our economy.

Canadian bank backs away from SCO (News.com)

Posted May 10, 2004 2:47 UTC (Mon) by flewellyn (subscriber, #5047) [Link]

Must be spring, the trolls are coming out to play.

Canadian bank backs away from SCO (News.com)

Posted May 10, 2004 13:17 UTC (Mon) by jonth (subscriber, #4008) [Link]

Nope, you just need to turn your irony detector way up....

Canadian bank backs away from SCO (News.com)

Posted May 10, 2004 17:10 UTC (Mon) by oconnorcjo (subscriber, #2605) [Link]

The funny thing is that thier stock price is almost at where the company was before the lawyers "came 'a knockin'". Except now they don't have a product to sell. Just think if they just focussed on a good OS distribution, SCO's stock price might be higher than this (look at RedHats recent rise) just by being one of the "good guys". At least "Darl and the gang" have shown thier true colors and thus will have a difficult time getting respectable jobs again. I also lost a lot of respect for David Boies for getting involved with SCO. It would be too optimistic to think that this case will hurt Bois like it is hurting McBride and SCO but I no longer respect him.