title=Connecting the Dots}
So why offer even $5 million for a company that, if its debtors have their
way, has a negative value?
Well Pamela Jones of Groklaw does an interesting job of connecting
the dots between Bill Gates and the proposed SCO buyout
Here's how it works. Prince Al-Waleed bin Talal Al Saud, a billionaire and
member of the Saudi royal family, is believed to be the money man. Stephen
Norris, who runs SNCP, is one of his chief financial advisers. Gates is a
friend of Al-Waleed, and the two have co-operated on expanding Microsoft in
. The two also joined forces to take over
Four Seasons Hotels
and take that company private for $3.8 billion in
February 2007. So, when I say they're friends, I mean, they're friends. You
don't buy 74 luxury hotels for almost $4 billion with someone you don't
With deals and friendships like this, heck, Bill could just pull out his
wallet, slip Al-Waleed the $5 million and, a wink and ta-da, the
zombie rises up again to continue to try to give Linux trouble. What a
Personally, though, I have another theory. At this point, how much harm can
really do to Linux? Almost no one took it seriously when SCO
first sued IBM
and started making threats against Linux and its customers.
Five years later, does anyone take this seriously? Does Microsoft ever gain
anything by sponsoring
Well, maybe Microsoft thinks that it does. After all, Steve Ballmer still
trots out his annual "Linux
violates Microsoft patent claims
" even though those patent
claims were shot down
the first time he did it back in 2004. After all, it
doesn't matter whether Linux IP FUD actually works; it's whether Microsoft
believes that it works.
Maybe there's another explanation though. Maybe, it's just that a sucker is
born every minute.
It's not like $5 million or, even $100 million if it comes to that, matters
that much to Al-Waleed or SNCP. When you're worth in excess of $25 billion,
what's a few million here or there? And, if blowing a few million makes your
buddy and business partner Gates happy, you can write it off as money well
spent on goodwill.
Well, not the goodwill of
Red Hat or any of the other Linux-using companies that have to deal with
insurance lawsuits of course, but what does that matter?
If I had a $100 million lying around, I really think I could
find a better investment for my money than buying SCO. I
could invest in, say, high-quality stocks, bonds, gold, New Orleans real estate,
collectable Pez containers or, just the other day, I got this interesting
investment opportunity from someone whose wealthy husband recently died of
esophageal cancer and needs to transfer 500,000 English pounds from Nigeria to
the United States.
Seriously, how does Stephen Norris
& Co. Capital Partners
and its Arabian oil billionaire friends think
they're going to get any return on their investment?
Well, first, they're not actually putting in $100 million in cash upfront.
The proposed SNCP/SCO deal
as laid out to the U.S. Bankruptcy Court in
has SNCP paying only $5 million for a new Series A Preferred stock. This new series
can be converted into 51 percent and 85 percent of SCO's equity, depending on
the amount drawn under the Debt Financing.
Notice those last words: "Debt Financing"? What SNCP is really
is "a five-year non-revolving
credit line [of up to $95 million] and bear a high but appropriate rate of
return (LIBOR (London Interbank Offered Rate) plus 17%), reflecting the risks
of this investment commitment and an commensurate rate of return. The Debt
Financing shall be secured by all of the assets of SCO, including all of its
present and future litigation claims."
There are, at my last count, four different
. Presuming they mean the one-year LIBOR,
would be paying 19.78 percent interest if the deal went through today. With
interest rates like this, I'm none too sure that the Bankruptcy Court will let
SNCP buy up
is bought up, the company has to
use this money for the "primary purpose and intended results of the
Plan, and the financing commitments provided under the MOU (Memorandum of
Understanding) is to encourage and promote an early and favorable resolution of
the Novell/M Litigation. Notwithstanding the August 2007 interim ruling by the
Utah District Court in the Novell Litigation,
believes it has an excellent chance to prevail in the Novell/
Litigation, including potential for an award of substantial damages in its
In English, what they're talking about is we give you $5 million, we loan
you up to $95 million, and you're to spend that money on trying to beat the
brains out of Novell, and then
What rock have these people been under?
has never been able to come close to proving any of its claims about Unix IP
(intellectual property) in Linux in court. And, besides, that August decision
they are talking about? It stated that Novell, and not SCO,
owned Unix's IP