Canadian bank runs away from SCO

Posted May 8, 2004 4:52 UTC (Sat) by hamjudo (guest, #363)
Parent article: Canadian bank backs away from SCO (News.com)

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.