Darl McBride Leaving SCO?

JoGiles writes "Linux-watch is reporting that while The SCO Group may go on to pursue its plans with a $100 million buyout, it will do so without its longtime CEO Darl McBride. Buried in the proposed MOU (Memorandum of Understanding) between Unix vendor and Linux litigator SCO and SNCP (Stephen Norris & Co. Capital Partners) is the note that "upon the effective date of the Proposed Plan of Reorganization, the existing CEO of the Company, Darl McBride, will resign immediately.""

Pending approval...

[LinDVD]

Assuming all of this stuff is approved by the bankruptcy courts for starters. I find it amazing how the tech media latches on to what MIGHT happen and not what actually HAS happened. "The SCO Group" didn't get any money yet, but many in the tech media act like they did.

Of course, that quasi-journalistic slut, MOG, projects that McBride's leaving was a goal of the Groklaw audience, when in fact, it never was.

It's "up to" $100M

[eddy]

A fairly important distinction, as anyone with Cable or ADSL will know.

I can assure you, when Novell is awarded the money SCOXQ.PK owe them, there will be none there.

NOT $100 Million, THAT WAS HYPE.

[Bruce Perens]

Folks,

This is not a $100 Million dollar offer. That was hyperbole. There will be a line of credit, but going in there is only a couple of million to take the stock profit and then what they need to pursue the case and pay off interest on existing debt as it is billed. Say $10 Million max. Remember that the Benchmark investment was unwound? This one will probably go through the same thing.

Bruce

Re:NOT $100 Million, THAT WAS HYPE.

[Bruce Perens]

Oops, that's "take the stock private".

Re:Smoking Bacon

[sherpajohn]

Mr. Norris was a co-founder of the Carlyle Group (and ironically the current head of that group is the ex-CEO of IBM ;).

Its all BIG money though...which begs the question - why? I mean does any really believe this up to $100M investment in the walking corpse of SCO is based on the possibility of them doing well business-wise? As many have pointed out its more likely a small fee to ensure that a) the anti-Linux FUD machine keeps operating b) a few scoundrels gets paid off and disappear c) certain skeletons stay firmly ensconced in the closet d) by going private a) and c) are easier to perform out of the eyes of stockholders or the SEC. given the financial weight of the folks behind this its just a tad on the scary side if you ask me.

Why LIBOR + 17%?

[stites]

The terms on the proposed loan read like the fine print in a credit card agreement. The interest rate starts at LIBOR + 17%. Some of the other fine print says:

"Payments: The Reorganized Debtor shall pay accrued interest on the outstanding principal balance in arrears monthly on the first day of each month commencing on the first day of the month following the Closing Date. The entire unpaid principal balance, together with any accrued interest and other unpaid charges, shall be due on the first day of the month following the expiration of the Loan Term (which date is sometimes referred to as the "Maturity Date")."

"Late Charges Default Interest Rate: Any payment not paid within ten (10) days of its scheduled payment date shall be subject to a late charge equal to the greater of $50.00 or five per cent (5%) of the amount of the delinquent payment. Upon the occurrence of an event of default, the margin used to compute the Effective Rate will automatically increase by an additional four percent per annum from the date thereof until the delinquent payment has been fully paid, both before and after judgment."

It is unlikely that SCO will actually be able to make monthly payments so why all of the penalties and escalating interest on what is probably an uncollectable debt? One possible reason can be found in the motion (346) which SCO filed with the bankruptcy court. There SCO asks the judge to treat the money owed by SCO to SNCP as debt on an equal footing with the debts owed to other creditors. Thus if SCO goes into a Chapter 7 windup then SNCP would get the same % partial pay out as all of the other creditors. If the judge agrees to treat the SNCP money as debt then it is to SNCP's advantage to balloon the amount of the debt as high as possible through missed payment penalties and escalating penalty interest. If the judge turns down the requests to treat the money from SNCP as debt then it doesn't really matter to SNCP whether SCO is missing 1% interest payments or 26% interest payments.

----------------------
Steve Stites

 

Re:Not the real bad guy

[Bruce Perens]

Bruce, now that Vista has bombed at the Corporate offices, you think Microsoft will still have an incentive to pursue Linux in court?

They haven't given up yet. Look at all of the OOXML dirty fighting they've done recently.