Ramius
Sends Letter to Agilysys Shareholders
NEW
YORK--(BUSINESS WIRE)--Ramius LLC:
Believes
Current Board has Failed to Effectively Oversee Agilysys and Lacks the Relevant
Experience and Necessary Skills to Restructure the Company
Reiterates
Qualifications of Ramius’ Independent, Highly Qualified, Director Nominees;
Questions Company’s Unwillingness to Work Cooperatively with Significant
Shareholder
RCG
Starboard Advisors, LLC, a subsidiary of Ramius LLC, together with their
respective affiliates (collectively, “Ramius”) today announced that it has sent
a letter to the shareholders of Agilysys, Inc. (“Agilysys” or the “Company”)
(NasdaqGS: AGYS
- News),
highlighting the need for substantial changes to the composition of the
Company’s Board of Directors (the “Board”) and reiterating its commitment to
nominating three highly qualified and independent candidates for election at the
2008 Annual Meeting of Shareholders. Ramius also questions the Company’s
apparent unwillingness to work constructively with a large shareholder to avoid
a contested election process. Ramius is the beneficial owner of approximately
13% of the Company’s outstanding common shares.
Ramius
Partner Mark Mitchell stated, “Over the past twelve months, Agilysys’ stock
price has declined by approximately 77%. This massive destruction of shareholder
value is, in large part, due to failed acquisitions, bloated costs, poor
management execution, and failed strategic initiatives. Given this poor
performance, as the Company begins the process of restructuring, we believe it
is critical for the Board to have relevant industry experience in order to make
better strategic and operational decisions.”
Added
Mitchell, “The three independent director nominees we have nominated for
election at the 2008 annual meeting have the requisite skills and experience to
help guide a successful turnaround at Agilysys. If elected, our nominees – John
Mutch, Steve Tepedino and James Zierick – are committed to working with the
other members of the Board to maximize value for all shareholders. Although we
are disappointed that Agilysys has shown an unwillingness to work cooperatively
with us, their second largest shareholder, we are committed to ensuring that
shareholders’ best interests are represented on the Board.”
The full
text of the letter follows:
February
2, 2009
TO:
Shareholders of Agilysys, Inc.
CC: Mr.
Martin F. Ellis (President and CEO)
Mr. Keith
M. Kolerus (Chairman of the Board of Directors)
Mr.
Charles F. Christ (Director)
Mr.
Thomas A. Commes (Director)
Mr. R.
Andrew Cueva (Director)
Mr.
Howard V. Knicely (Director)
Mr.
Robert A. Lauer (Director)
Mr.
Robert G. McCreary, III (Director)
Ms.
Eileen M. Rudden (Director)
Fellow
shareholder:
RCG
Starboard Advisors, LLC, a subsidiary of Ramius LLC, together with their
respective affiliates (collectively, “Ramius”), currently owns approximately 13%
of the outstanding common stock of Agilysys, Inc. (“Agilysys” or the” Company”),
making us the second largest shareholder of the Company. Over the past twelve
months, the value of Agilysys’ shares has declined by approximately 77%. We
believe this decline, in large part, is due to continuing poor operating
performance, failure to timely file financial statements, and a failed auction
process. Although the Company has made management changes and begun the process
of seeking to reduce costs, these changes do not go nearly far enough in order
to put the Company back on the path towards maximizing shareholder value. This
Board of Directors (the “Board”) has overseen multiple failed acquisitions, a
bloated cost structure, poor management execution, and failed strategic
initiatives. We believe the time has come for substantial changes to be made to
the composition of the Board.
As you
may be aware, on June 20, 2008, we delivered a letter to the Company nominating
three highly qualified candidates for election to the Board at the Company’s
2008 Annual Meeting. The three nominees, John Mutch, Steve Tepedino, and James
Zierick (the “Nominees”) have extensive experience in the Value-Added Reselling
(“VAR”), distribution, and software industries. We went to great lengths to seek
out candidates who collectively possess the appropriate skill sets to help
oversee a turnaround of Agilysys. For several months now, we have tried to work
cooperatively with management and the Board to reach an amicable resolution with
the objective of improving the quality and effectiveness of the Board while
avoiding the necessity for a costly proxy contest. Unfortunately, at this point,
we have reached an impasse despite Ramius’ good faith efforts and
negotiations.
Compared
to its peers, Agilysys currently operates at substantially lower operating
margins. We believe this is primarily attributable to an inefficient cost
structure, a misguided growth strategy, and lack of management execution. Given
this poor performance, as the Company begins the process of restructuring, we
believe it is critical for the Board to have relevant industry experience in
order to help make strategic and operational decisions.
Since
over 85% of Agilysys’ revenue comes from the VAR business and in light of the
Company’s poor operating history in that area, it would seem logical that the
Board should have directors with relevant experience in that industry. However,
at the current time, the Board is lacking in this area of expertise. Since the
time of our initial investment, we have tried to impress upon management that it
is imperative for the Board to have a knowledgeable VAR expert. The Company has
done nothing to address this void in the boardroom. To that end, we initially
nominated, and subsequently recommended for appointment to the Board through a
settlement, Steve Tepedino. Mr. Tepedino has an extensive background in the VAR
and distribution industries that spans 25 years. Notably, he has a record of
high performance over 22 years at Avnet, Inc. and since May 2006 has
successfully built a management consulting firm specializing in the VAR
industry.
Unfortunately,
the current Agilysys Board has not been receptive to our recommendation and has
instead taken the position that the Board will not interview Mr. Tepedino, nor
consider him as a candidate for the Board. The Board bases this decision on the
claim that they believe Mr. Tepedino to be conflicted. However, when asked
repeatedly to explain with specificity the nature of his alleged conflicts, they
decline to provide any details or constructive feedback. It is our firm belief
that Mr. Tepedino is not actually conflicted and, if named or elected to the
Board, would be instrumental in helping to guide a successful turnaround at
Agilysys.
In
addition to the strong qualifications of Mr. Tepedino, our other two nominees,
John Mutch and James Zierick, are also highly qualified and ready to serve the
best interests of Agilysys shareholders. Mr. Mutch and Mr. Zierick have both had
highly successful careers in the software and technology industries, and,
together with Mr. Tepedino, provide a solid base of strategic and operational
experience. We believe this is exactly the type of experience necessary to guide
Agilysys to a prosperous recovery. Detailed biographies of the Nominees are
included below.
Agilysys’
position on our Nominees, particularly Mr. Tepedino, is perplexing especially
given the nature of the Company’s corporate governance and bylaws. Ohio law
provides that shareholders have the right to cumulate votes in the election of
directors. This provision effectively gives each share one vote for each board
seat up for election at the annual meeting. In the case of the 2008 meeting,
there are three seats up for election, and therefore, each share is entitled to
three votes. With cumulative voting, shareholders are then able to either apply
those three votes evenly over three director nominees or accumulate the three
votes and apply all three votes to one or more director nominees. In light of
the ability to cumulate votes, with our approximately 13% stake in the Company
and with the support of other stockholders, it should be clear to the Board that
we have the ability to obtain Board representation at the upcoming annual
meeting (which is the delayed 2008 annual meeting as a result of the Company’s
failure to timely file audited financial statements) and at the 2009 annual
meeting which we understand the Board intends to hold in the summer of
2009.
Based
upon the foregoing and the clear need for meaningful change on the board of a
company which has continually failed to adequately address the serious issues
facing it, it seems to us a waste of Company resources to force a costly and
distracting proxy contest. Unfortunately the Board has left us no choice. We are
committed to taking the necessary steps to add the right representatives to the
Board with the business experience necessary to address the serious problems
facing the Company. We are confident in our ability to succeed at the 2008
annual meeting.
As we
have outlined above, we firmly believe that substantial change to the Agilysys
Board is warranted. The current Board has overseen the Company through a period
of massive shareholder value destruction and yet has been unwilling to work
cooperatively with us, their second largest shareholder. Over the coming weeks,
we will be filing proxy materials and communicating with shareholders in
relation to the 2008 Annual Meeting of Shareholders. We greatly appreciate your
attention and support.
Best
Regards,
/s/
Mark R.
Mitchell
Ramius
LLC
Partner
Biographies
of the Nominees:
John Mutch (Age 52) is the
founder and a Managing Partner of MV Advisors, LLC. In March 2003, Mr. Mutch was
appointed to the Board of Directors of Peregrine Systems Inc. (“Peregrine”), a
global enterprise software provider, to assist Peregrine and its management in
development of a plan of reorganization, which ultimately led to Peregrine’s
emergence from bankruptcy. From August 2003 to December 2005, Mr. Mutch served
as President and Chief Executive Officer of Peregrine, during which time he
restructured and stabilized its business operations and led Peregrine through
its acquisition by Hewlett-Packard. Mr. Mutch served as a director of Overland
Storage Inc., a provider of data protection appliances, from April 2003 to June
2005. From 2002 to 2003, Mr. Mutch served as a director of Brio Software, Inc.,
a developer of software products. Mr. Mutch served as President of HNC Software
(“HNC”), an enterprise analytics software provider, from September 1999 to June
2001, and as Chief Executive Officer from December 1999 until the sale of HNC to
Fair Isaac Corporation in August 2002. Mr. Mutch joined HNC in 1997, and from
1997 to 1999 served in various other senior executive positions, including Vice
President of Marketing and Corporate Development and President of HNC Insurance
Solutions. In 1994, Mr. Mutch founded MVenture Holdings, Inc., a private equity
fund that invests in public and private technology companies, which became
Mventure Holdings LLC in 2002. Mr. Mutch is a director of, and serves on the
audit committee of, Edgar Online, Inc. Mr. Mutch is a director of, and serves as
the chairman of the audit committee of, Adaptec, Inc. Mr. Mutch is the chairman
of the board of directors of Aspyra, Inc. and serves on its nominating
committee. Mr. Mutch earned a B.S. in Applied Economics from Cornell University,
where he serves on the advisory board for the undergraduate school of business,
and a Masters of Business Administration from the University of Chicago Graduate
School of Business.
Steve Tepedino (Age 47) was a
co-founder, and has served as President and Chief Executive Officer, of Channel
Savvy LLC, a management consulting firm specializing in technology channels,
since May 2006. Additionally, since May 2006 Mr. Tepedino has served as a Member
of JET Creative LLC, a management consulting company specializing in the
information technology industry. From 1984 to 2006, Mr. Tepedino worked in
various positions within divisions of Avnet, Inc., a Fortune 500 company focused
on global technology distribution. From 2005 to 2006, Mr. Tepedino served as
Vice President of Avnet, Inc. and President of Avnet Technology Solutions,
Americas, a global technology sales and marketing organization with operations
in the United States, Mexico and Canada. From 2002 to 2005 Mr. Tepedino served
as President of Avnet Partner Solutions, Americas, an industry-leading,
value-added distributor and provider of servers, storage, software and services,
with operations in the United States, Mexico and Canada. Mr. Tepedino earned a
B.S. in Engineering Chemistry from State University of New York at Stony
Brook.
James Zierick (Age 52) has
served as interim Chief Executive Officer of Aspyra, Inc. (“Aspyra”), a
healthcare information technology and service provider that specializes in
Clinical Information Systems (CIS) and Diagnostic Information Systems (DIS) for
healthcare providers, since February 2008 and a director of Aspyra since
September 2007. From January 2007 to December 2007, Mr. Zierick served as Chief
Executive Officer of LogicalApps, Inc., a provider of embedded controls software
for enterprise applications. From 2004 to 2006, Mr. Zierick was Executive Vice
President of Worldwide Field Operations for Peregrine, where he led a 350 person
sales, alliance, customer support and professional services organization. From
1989 to 2003, Mr. Zierick was a Principal in McKinsey & Company, where he
helped lead the company’s Southern California technology and operational
effectiveness practices. Mr. Zierick earned a Masters of Business Administration
from Dartmouth College, Amos Tuck School of Business, a B.S. in Engineering from
Dartmouth College, Thayer School of Engineering, and a B.A. in Engineering
Sciences from Dartmouth College.
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 preliminary 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 AS THEY BECOME AVAILABLE BECAUSE THEY
WILL 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.
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 or Renée Soto, 212-687-8080