Interesting story. Our lecturer in sofware design told us just two days ago that the most common cause for failed software projects is that the sponsor (of whatever kind - monetary, company politics, ...) pulled out.
Anyway, I think the LoC company is pretty much an urban legend. I imagine that early translation secretaries (before computer time was cheap enough that compilers were worth it) were measured by lines of code they could translate - just as today's compilers' speed is measured in LoC/min. Then there was IBM, which was rumoured to have this system. But I'm not sure about that. After that, any company that would be stupid enough to introduce such a system would remove it within a month - or go bankrupt. It just doesn't work.