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The backers of an effort to buy the Unix computer operating system from the bankrupt SCO Group say they believe the venerable software has a bright future and plan to spend an initial $12 million to upgrade it to meet technical standards and needs.
Novell Inc., which has been locked in a fierce legal battle with the Lindon-based SCO Group, is objecting to the $600,000 sale to an entity called UnXis Inc. that is backed by Stephen Norris, who operates a private equity fund and has twice before tried to buy the system out of bankruptcy or inject capital into SCO.
The sale needs the approval of the judge overseeing SCO's bankruptcy in Delaware. A hearing on the issue is set for Wednesday.
UnXis is a private equity group formed in June 2009 specifically to purchase Unix and is backed by MerchantBridge & Co. and Gerson Global Advisors, as well as Norris of Stephen Norris Capital Partners, said Richard A. Bolandz, CEO of UnXis.
SCO "is really a tremendous company with a great history and a great product that unfortunately made some very poor strategic choices," said Bolandz.
The SCO Group filed for bankruptcy in 2007 after a setback in its legal battle with Novell that began in 2004. That lawsuit sprang from another one filed by SCO against IBM in which the small Utah company alleged the technology giant used Unix code as a basis for changes that made the Linux system a serious competitor in the market for software that operates businesses computer systems.
SCO and Novell have battled over which one actually owns the copyrights to the Unix code created before 1995, when Novell sold the software business. Last year, a jury said Novell owned the copyrights, but SCO has appealed the case.
In filings in the Delaware court, Novell objects to the sale, saying SCO will not be able to pay a $3 million debt with the sale of Unix for only $600,000 and that Novel must first approve any sale. Novell declined to comment further on the proposed sale.
Bolandz said the people backing the purchase of Unix believe the operating system has a profitable future if it can be upgraded to meet present-day technology needs, including its use in large banks of computers called clouds.
"What we have is an installed base of about 1.5 million servers in 81 countries," he said. "These are such loyal customers of marquee names such as Sears, Rite Aid, McDonald's, and I could go on and on. Unix is recognized as the most reliable operating system, and it runs and runs and runs."
UnXis has said it will retain almost all of the sales, support and technology staffers who work for SCO, though Bolandz said he didn't know how many employees SCO now has.
UnXis will not be assuming the Novell and IBM litigation as part of the deal. In the past, SCO said it would continue to pursue the litigation after it sold off the Unix business, which is its only substantial asset. SCO representatives declined to comment, and it's unclear whether the company could cover expenses related to the lawsuits with such a small sale price.
Three years ago, SCO announced a reorganization plan that would have brought in $100 million in financing from Stephen Norris Capital Partners, but that proposal never came to fruition.