Tuesday
March 3, 8:00 am ET
Responds
To Agilysys’ Recent Mischaracterizations And Misleading Statements
Urges
Shareholders To Vote for New, Highly Qualified, Independent
Nominees
NEW
YORK--(BUSINESS WIRE)--RCG Starboard Advisors, LLC, together with Ramius LLC and
its other affiliates (collectively, the “Ramius Group” or “Ramius”), today
announced that it has sent a letter to the shareholders of Agilysys, Inc.
(“Agilysys” or the “Company”) (NasdaqGS: AGYS - News) urging them to elect new,
highly qualified, independent director nominees at the Company’s substantially
delayed 2008 Annual Meeting of Shareholders on March 26, 2009. Ramius is the
beneficial owner of approximately 13.0% of the Company’s outstanding common
shares.
Ramius
Partner Mark Mitchell stated, “The current Board has overseen Agilysys through
ill-conceived and poorly executed acquisitions as well as abysmal operating
performance that has resulted in a massive destruction of shareholder value.
Even more egregious is the fact that the Company is now attempting to defend its
abysmal performance and its unwillingness to negotiate in good faith with its
second largest shareholder with gross mischaracterizations of the facts and
circumstances. Shareholders should disregard the Company’s attempt to distract
them from the real issues facing Agilysys and seriously question the ability of
the current Board to fix the problems that they themselves
created.”
Mitchell
added, “Swift action must be taken to turn Agilysys around and we believe
improved performance begins with the election of new, highly qualified,
independent directors to the Board who will bring a fresh perspective to
evaluating the opportunities and challenges facing Agilysys. We urge our fellow
shareholders to vote FOR Ramius’ nominees on their GOLD proxy cards
today.”
For more
information about this election contest, please visit
www.ShareholdersForAgilysys.com.
The full
text of the letter follows:
March 3,
2009
Dear
Fellow Agilysys Shareholder:
The
Ramius Group is seeking your support to elect new, highly qualified, independent
director nominees – John Mutch, Steve Tepedino, and James Zierick - to the
Agilysys Board at the Company’s 2008 Annual Meeting on March 26, 2009. Under the
direction of the current Board, Agilysys shareholders have suffered massive
declines in shareholder value. We believe the current Board has consistently
failed to represent the best interests of all Agilysys shareholders and provide
accountability and transparency. We are not seeking control of the
Board. We believe that the election of new, highly qualified, independent
directors to the Board will bring a fresh perspective to evaluating the
opportunities and challenges facing Agilysys today. We urge you to vote your
shares for our independent nominees on the enclosed GOLD proxy card
today.
DO
NOT BE FOOLED BY AGILYSYS’ MISLEADING STATEMENTS IN ITS FEBRUARY 20th
LETTER
AGILYSYS STATES: “This contest is…unnecessary since
we have agreed, as announced on February 5, 2009, to place two of the Ramius
nominees on the Board – Mr. John Mutch and Mr. James Zierick…In our
negotiations, Ramius had originally indicated a desire to have Mr. Mutch be the
preferred nominee for our Board, but after we had agreed to a framework for a
settlement, Ramius suddenly insisted that Mr. Steve Tepedino be the preferred
nominee…”
RAMIUS RESPONDS: From the
outset, Ramius has made clear in all discussions with Agilysys that any
potential settlement would require the addition of a new, qualified VAR expert
to the Board. With over 85% of the Company’s revenue coming from VAR businesses,
and particularly in light of such poor operating performance, it is absolutely
crucial for the Company to have a qualified VAR expert on the
Board.
Mr.
Tepedino has 25 years of experience in the VAR and distribution industries and
has the appropriate skill sets to help navigate a successful turnaround at
Agilysys. Given the Company’s poorly executed acquisition strategy and extremely
weak operating results, immediate and substantial change at the Board level is
imperative to restore shareholder value at Agilysys.
Contrary
to what Agilysys would have you believe, Ramius did not originally indicate a
“preferred nominee.” On the other hand, we were extremely disappointed when
Agilysys, at the last minute, rejected Mr. Tepedino out of hand, without
properly considering his strong credentials for serving on the
Board.
AGILYSYS STATES: “Mr. Tepedino is unacceptable to
serve on the Board of Agilysys…due to his historical and current business
activities. The company is particularly concerned about the fact that Mr.
Tepedino consults to many competitors and customers of Agilysys… Mr. Tepedino is
also President of a software company that is owned and run by the principals of
Software Information Systems, a competitor to Agilysys in the IBM
market.”
RAMIUS RESPONDS: Mr. Tepedino
has an exemplary record of performance during his 22 years at Avnet, Inc. We are
unaware of any good reason why his prior role at Avnet would prohibit him from
being a productive member of the Agilysys Board. Since May 2006, Mr. Tepedino
has successfully built a management consulting firm, Channel Savvy, specializing
in the VAR industry. The nature of his consulting practice in no way jeopardizes
his ability to represent the best interests of Agilysys shareholders. In fact,
his expertise in the channel and VAR business will provide valuable insight to
the Board of Agilysys as the Company attempts to achieve best practice
performance levels and restore investor confidence.
Further,
the allegation that Mr. Tepedino is conflicted due to his role as President of
VBS Software is grossly misleading. VBS Software is a business software ERP
(Enterprise Resource Planning) company serving the VAR industry. The holding
company that owns VBS Software, SIS Holdings, also owns another company,
Software Information Systems. Software Information Systems competes against
Agilysys. VBS Software and Software Information Systems are completely separate
companies and Mr. Tepedino has absolutely nothing to do with the operations or
management of Software Information Systems.
Do
not be misled. Agilysys is attempting to create the perception of conflict in
order to prevent Mr. Tepedino from serving on the Board of Agilysys. In reality,
Mr. Tepedino is not conflicted, is uniquely qualified to help the Board properly
address the serious operational issues it faces, and is committed to working to
further the best interests of all Agilysys shareholders.
AGILYSYS STATES: “By refusing to consider an
alternative candidate and adamantly insisting on Mr. Tepedino, Ramius is causing
the Board to unnecessarily expend time and money to protect the company’s
shareholders from a Board nominee with competitive business relationships that
potentially weaken Agilysys’ market position.”
RAMIUS
RESPONDS: Over the past six months, we have made several
good-faith settlement proposals to Agilysys in order to avoid a proxy contest.
We even recently proposed an
alternative settlement to the Company pursuant to which Ramius would identify
and nominate an alternative director, subject to Company approval, that would
bring similar experience and skills as those possessed by Mr. Tepedino. Once
again, the settlement offer was hastily rejected by the Company. The most
recent settlement proposal included:
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The
immediate appointment to the Board of Mr. Mutch and Mr. Zierick, the two
nominees that the Company previously characterized as “qualified and
acceptable”, and;
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The
nomination for election to the Board at the 2009 annual meeting of a third
yet-to-be-identified Ramius nominee with specific expertise in the VAR and
distribution channels.
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We have
tried in good faith to work cooperatively with the Company to come to a mutually
agreeable settlement. It is indisputable that this Company needs a new,
qualified VAR expert on the Board, yet the Company rejected not only Mr.
Tepedino, but also our latest proposal to nominate a different qualified VAR
expert to the Board at the 2009 Annual Meeting. Unfortunately, the Company is
unwilling to negotiate with its second largest shareholder in good faith and has
defended its positions to shareholders with gross
mischaracterizations.
AGILYSYS STATES: “Little more than a year after the
company had been dramatically transformed…Ramius began to assert that the
company’s strategy was flawed, questioning the ability of management and the
Board, and stating that Agilysys was trading at a conglomerate
discount.”
RAMIUS RESPONDS: Agilysys’
self proclaimed “transformation” which consisted of nine failed acquisitions
totaling $410 million has destroyed 96.5% of the Company’s enterprise value as
of February 25, 2009. Unfortunately, shareholders are left far worse off than if
the Company had simply returned the cash to shareholders instead of spending the
cash on nine failed acquisitions. This enormous and staggering destruction of
shareholder value has decimated the Company’s stock price to the point where the
stock trades for a value of only slightly above net cash per share.
The
current Board has overseen Agilysys through ill-conceived and poorly executed
acquisitions as well as abysmal operating performance. We seriously question the
ability of the current Board to fix the problems that they themselves
created.
AGILYSYS
STATES: “Since June 30, 2008, Agilysys has
executed a series of actions to reduce its cost structure and improve
profitability.”
RAMIUS RESPONDS: Agilysys’
current cost cutting plan fails to adequately address operating margin issues.
Even when including the announced “cost cuts,” the Company still only projects
to earn $24 million in EBITDA for fiscal year 2009. This implies an EBITDA
margin of just 3.0%, using the low end of the Company’s former revenue guidance.
These results are completely unacceptable. Consider the facts:
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MICROS
Systems, Inc., the Company’s closest competitor in the Hospitality
Solutions Group generated an LTM EBITDA margin of
18.1%.
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Forsythe
Technology, Inc. the closest competitor in the Technology Solutions Group,
generated fiscal year 2007 EBITDA margins of
7.9%.
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Arrow
and Avnet, which operate as distributors without the benefit of
significant high margin value added services similar to Agilysys’
business, generated LTM EBITDA margins of 4.0% and 4.2%
respectively.
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Innovativ
Systems Design, Inc. – a business which Agilysys acquired as a key part of
its VAR strategy, operated at EBITDA margins between 9.3% and 14.5% as a
standalone company for the three years prior to its acquisition by
Agilysys.
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The
historical and projected operating results are unacceptable and swift action
must be taken to remedy this significant underperformance. Improved performance
begins with the election of new, highly qualified, independent directors to the
Board who will bring a fresh perspective to evaluating the opportunities and
challenges facing Agilysys today.
AGILYSYS STATES: “The current Board is committed to
its responsibility to act in the best interests of all
shareholders...”
RAMIUS RESPONDS: The current
Board has consistently failed to represent the best interests of Agilysys
shareholders and is responsible for significant destruction of shareholder
value. The much delayed 2008 annual meeting, scheduled for March 26, 2009, is
already more than six months later than when it should have been held. If the
current Board is actually committed to the best interests of all shareholders,
we would expect the Board to promptly schedule the 2009 annual meeting for July
or August 2009, when the Company typically holds its annual meeting. We would
view any delay in scheduling the 2009 meeting date as an attempt to further
disenfranchise shareholders.
The
current Board oversaw nine failed acquisitions totaling $410 million which
resulted in the destruction of a staggering 96.5% of the Company’s enterprise
value as of February 25, 2009.
In
addition, the current Board approved the relocation of the corporate executive
offices from Cleveland Ohio, where the Company’s principal businesses are
located, to Boca Raton, Florida, one of the most expensive locations in a state
where Agilysys has no business purpose. We believe there was absolutely no
justification for this move, and came at a substantial cost to
shareholders.
The
current Board also allowed its former Chairman and CEO, Arthur Rhein, to retire
and took no steps to hold him accountable for the destruction of shareholder
value and abysmal operating performance. Instead the Board chose to reward Mr.
Rhein with severance for a period of two years and to continue Mr. Rhein’s group
benefits, executive benefits and most perquisites for a period of two years. The
Company also maintains similar lucrative severance and “change of control”
arrangements with its executive officers.
Has this
Board understood the need for compensation to be tied to performance? Evidently
not, since the current Board
has rewarded the top five executives over $16 million in total compensation over
the past two years, while at the same time eliminating 96.5% of the Company’s
enterprise value as of February 25, 2009. Executive compensation should
be linked to value delivered to shareholders. Clearly
there is no correlation between Agilysys’ poor performance and the compensation
of its executive officers.
DO
NOT BE MISLED – AGILYSYS NEEDS A NEWLY CONSTITUTED BOARD THAT IS DETERMINED TO
RUN THE COMPANY FOR THE BENEFIT OF ALL SHAREHOLDERS
Please do
not be misled by the Company’s attempt to distract you from the real issues
facing Agilysys. The current Board has overseen a massive decline in shareholder
value and appears to have a complete disregard for shareholder value. Ramius’
independent and knowledgeable nominees have the relevant experience and
fortitude to significantly improve the Company’s businesses and create
substantial value for all shareholders. We believe the election of new directors
will send a strong message to management and the remaining members of the Board
that shareholders demand that the Board represent their best
interests.
We urge
you to sign, date and return the enclosed GOLD proxy card today with a
vote FOR our
nominees.
For more
information about this election contest, please visit www.ShareholdersForAgilysys.com
We thank
you for your support.
Best
Regards,
/s/ Mark
R. Mitchell
Mark R.
Mitchell
Partner,
Ramius LLC
About
Ramius LLC
Ramius
LLC is a registered investment advisor that manages assets in a variety of
alternative investment strategies. Ramius LLC is headquartered in New York with
offices located in London, Tokyo, Hong Kong, Munich, and Vienna.
CERTAIN
INFORMATION CONCERNING PARTICIPANTS
Ramius
Value and Opportunity Master Fund Ltd (“Value and Opportunity Master Fund”),
together with the other participants named herein, has made a definitive filing
with the Securities and Exchange Commission (“SEC”) of a proxy statement and
accompanying GOLD proxy card to be used to solicit votes for the election of a
slate of director nominees at the 2008 annual meeting of shareholders of
Agilysys, Inc., an Ohio corporation (the “Company”).
VALUE AND
OPPORTUNITY MASTER FUND ADVISES ALL SHAREHOLDERS OF THE COMPANY TO READ THE
PROXY STATEMENT AND OTHER PROXY MATERIALS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION. SUCH PROXY MATERIALS WILL BE AVAILABLE AT NO CHARGE ON THE SEC’S
WEB SITE AT HTTP://WWW.SEC.GOV. IN ADDITION, THE PARTICIPANTS IN THIS PROXY
SOLICITATION WILL PROVIDE COPIES OF THE PROXY STATEMENT WITHOUT CHARGE UPON
REQUEST. REQUESTS FOR COPIES SHOULD BE DIRECTED TO THE PARTICIPANTS’ PROXY
SOLICITOR, INNISFREE M&A INCORPORATED, AT ITS TOLL-FREE NUMBER: (888)
750-5185.
The
participants in the proxy solicitation are Value and Opportunity Master Fund,
Parche, LLC (“Parche”), Ramius Enterprise Master Fund Ltd (“Enterprise Master
Fund”), RCG PB, Ltd. (“RCG PB”), Ramius Advisors, LLC (“Ramius Advisors”), RCG
Starboard Advisors, LLC (“RCG Starboard Advisors”), Ramius LLC (“Ramius”), C4S
& Co., L.L.C. (“C4S”), Peter A. Cohen (“Mr. Cohen”), Morgan B. Stark (“Mr.
Stark”), Thomas W. Strauss (“Mr. Strauss”), Jeffrey M. Solomon (“Mr. Solomon”),
John Mutch (“Mr. Mutch”), Steve Tepedino (“Mr. Tepedino”) and James Zierick
(“Mr. Zierick”).
As of the
date of this filing, Value and Opportunity Master Fund beneficially owns
2,342,130 shares of Common Stock of the Company. Parche beneficially owns
323,761 shares of Common Stock of the Company. RCG PB beneficially owns 277,103
shares of Common Stock of the Company. RCG Starboard Advisors, as the investment
manager of Value and Opportunity Master Fund and the managing member of Parche,
is deemed to be the beneficial owner of the 2,342,130 shares of Common Stock of
the Company owned by Value and Opportunity Master Fund and the 323,761 shares of
Common Stock of the Company owned by Parche. Enterprise Master Fund, as the sole
non-managing member of Parche and owner of all economic interests therein, is
deemed to be the beneficial owner of the 323,761 shares of Common Stock of the
Company owned by Parche. Ramius Advisors, as the investment advisor of each of
Enterprise Master Fund and RCG PB, is deemed to be the beneficial owner of the
323,761 shares of Common Stock of the Company owned by Parche and the 277,103
shares of Common Stock of the Company owned by RCG PB. Ramius, as the sole
member of each of RCG Starboard Advisors and Ramius Advisors, C4S, as the
managing member of Ramius, and Messrs. Cohen, Stark, Strauss and Solomon, as the
managing members of C4S, are each deemed to be the beneficial owners of the
2,342,130 shares of Common Stock of the Company owned by Value and Opportunity
Master Fund, the 323,761 shares of Common Stock of the Company owned by Parche
and the 277,103 shares of Common Stock of the Company owned by RCG PB. Messrs.
Cohen, Stark, Strauss and Solomon share voting and dispositive power with
respect to the shares of Common Stock of the Company owned by Value and
Opportunity Master Fund, Parche and RCG PB by virtue of their shared authority
to vote and dispose of such shares of Common Stock. As of the date of this
filing, Mr. Mutch does not beneficially own any shares of Common Stock of the
Company. As of the date of this filing, Mr. Tepedino beneficially owns 10,670
shares of Common Stock of the Company. As of the date of this filing, Mr.
Zierick beneficially owns 775 shares of Common Stock of the
Company.
As
members of a “group” for the purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended, each of the participants in this proxy
solicitation is deemed to beneficially own the shares of Common Stock of the
Company beneficially owned in the aggregate by the other participants. Each of
the participants in this proxy solicitation disclaims beneficial ownership of
such shares of Common Stock except to the extent of his or its pecuniary
interest therein.
Contact:
Media
& Shareholders:
Sard
Verbinnen & Co.
Dan
Gagnier/Renée Soto, 212-687-8080
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Source:
Ramius LLC