An email leaked last Thursday from the SCO Group, indicating that Microsoft was behind a $US50 million investment in SCO in October 2003 by BayStar Capital, was inaccurate, SCO has said.
"It was simply a misunderstanding of facts by an outside consultant who was working on an unrelated project to the BayStar transaction," a spokesperson for SCO, Marc Modersitzki, said.
The leaked letter was written on October 12, 2003, by Mike Anderer, a consultant with S2 Strategic Consulting. It was addressed to Chris Sontag, vice-president and general manager of SCOsource, the division of SCO responsible for overseeing intellectual property and copied to Bob Bench, CFO of SCO.
The email was posted on www.opensource.org by Eric Raymond, president of the Open Source Initiative, after he received it anonymously.
Anderer's writings indicate that SCO raised a lot of money with the help of Microsoft. The following is an excerpt from Anderer's October 12 email:
"I realise the last negotiations are not as much fun, but Microsoft will have brough[t] in $US86 million for us including BayStar," Anderer wrote. "The next deal we should be able to get from $US16-20 (million), but it will be brutal as it is for go-to-market work and some licenses."
"This is the smoking gun," Raymond wrote in response to that comment. "We now know that Microsoft raised at least $US86 million for SCO but according to the SCO conference call this morning [March 3], its cash reserves were $US68.5 million. If not for Microsoft SCO would be at least $US15 million in debt today."
The email suggested Microsoft was not only behind the BayStar deal but had the ability to help SCO raise further cash if needed and would rather use "BayStar like entities" to get them the money.
SCO denied these allegations.
"Contrary to speculation ... Microsoft did not orchestrate or participate in the BayStar transaction," Modersitzki said.
Microsoft and BayStar also issued statements indicating the contents of the email were incorrect.
"The allegations in the postings are not accurate," Microsoft said.
"Microsoft has purchased a licence to SCO's intellectual property, to ensure interoperability and legal indemnification for our customers. The details of this agreement have been widely reported and this is the only relationship Microsoft has with SCO. In addition, Microsoft has no direct or indirect financial relationship with BayStar."