Days after BayStar Capital Management LLC told The SCO Group Inc. that it was ending its agreement with SCO and demanding that SCO redeem BayStars 20,000 shares of SCOs series A-1 convertible preferred stock, SCO says it still doesnt know why BayStar is doing this.
According to SCOs director of corporate communications, Blake Stowell, "BayStar hasnt responded to our requests for exactly how SCO breached four sections of the companies contracts."
"Theyve not been forthcoming to SCO or any member of the media," he said.
When asked directly how SCO has broken its agreement, BayStar spokesman Bob McGrath replied, "No comment." He added, "At this time, we are not answering any questions about SCOs announcement concerning BayStar." In short, BayStar is not even confirming that it send SCO the letter.
Some analysts have suggested that BayStar may have made its demands for immediate redemption of the shares because it wanted more control of the company. To that, Stowell replied, "When the exchange took place, they were offered a board seat. I believe that offer still stands, and to this point they havent chosen to take the board seat."
Stowell said he wanted to clarify that "just because BayStar is asking for redemption doesnt mean that it will happen. SCO is as well-funded today as it was a week ago, and redemption hasnt taken place."
Dion Cornett, managing director at Decatur Jones Equity Partners LLC, an independent equity-research firm focused on small to midsized growth companies, said, "I cant get inside BayStars brain, but I think theyre pulling out because they no longer believe SCO is a good investment."
Stacey Quandt, principal analyst at Quandt Analytics, said she agrees. "The implication is that BayStar thinks SCO will not succeed with its case."
Cornett continued, "I cant believe theyre doing this just because of a press release [one of BayStars purported claims against SCO]. I dont know what spooked them, but based on the timing, it might have been because IBM had just filed for summary judgment."
Quandt added, "When you look at SCOs situation, maybe BayStar has decided to cut their losses."