Wednesday, April 02, 2008

 

4/2 SNR: $100 Million? What $100 Million?

Um, as I was saying about that $100M buyout deal... well, deal's off, sorry. Seems that the chorus of vehement objections had the desired effect, and -- as it turns out -- there is actually a downside to utterly failing to meet the basic requirements of a bankruptcy reorg plan, like showing that the buyer actually has the money, and that you have some sort of business plan in hand so you won't be back in BK court again in a year's time. Stuff like that.

So they're insisting the deal isn't completely dead, and they're going to restructure it as a straight asset purchase instead of the initial intricate proposal (which I havek to admit I couldn't make head or tail of, myself). So maybe we'll hear from SNCP again. Although SCO's also never admitted that the DaimlerChrysler suit is lost for good, even though there's no longer any such thing as "DaimlerChrysler".

My personal hunch is that SNCP won't be up for another bite at the apple. Certainly not an asset purchase type of bite. The problem with any future asset purchase is the same thing that sank the York deal. SCO would have to come clean and state specifically exactly what it owns, and be able to prove it. They've gone to ridiculous lengths over the last 5 years to avoid doing that, and I doubt they'll start now. And this time around everyone's watching a bit more closely; already the BK trustee has cautioned them not to try selling anything they don't own. There's no way to spin that as a good sign, not that I can think of.

The really great thing about the deal falling through (other than, obviously, the deal falling through) is that there isn't enough time left to put a new deal together before the Novell trial. The SNCP proposal would've expired if it hadn't been approved by April 28th, the day before the trial, which suggests the numbers only penciled out if there was still some doubt about the outcome of the Novell case. If another deal appears in the future, which is far from certain, it will happen after the case is over, and Kimball decides how much SCO owes to Novell. That's going to change the whole landscape, and not in SCO's favor.

Now, if they'd filed a viable plan in a timely fashion and generally played by the rules, there might've been time to fix any deficiencies before the 29th, a.k.a. Doomsday. But instead they tried to railroad the thing through the BK court at the last minute, and now there's no time for a Plan B. Oh, well. C'est la vie.

I think SCO's main goal is to stave off the Novell trial in any way they can. That's what the BK filing was about, and that may be what the York & SNCP deals were both about. And they certainly weren't in a hurry to get the trial going before the BK filing, either. Unless they can find a way to get the BK stay reimposed in Delaware, I think the focus now shifts back to Utah, and figuring out if there's any last-minute way to game the system and push the trial date off a few more months. I'm not a lawyer (have I mentioned that yet?) so I don't know what their odds might be. My hunch is that they aren't good, though.

The news coverage of the latest twist ought to be good. I'll try to do another roundup tomorrow and cover at least the choice bits. I'm serious. Or if not tomorrow, at least some time soon, before the Novell trial at least.

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