Agilysys, Inc. (AGYS) Announces $35 Million Convertible Preferred Investment by MAK Capital

Agilysys, Inc. (Nasdaq: AGYS), a leading global provider of next-generation hospitality software solutions and services, today announced a $35 million investment from MAK Capital One, LLC (“MAK Capital”), a leading investment management firm that has been a significant shareholder of the Company since 2007. Michael Kaufman, the Chairman of the Board of Directors of Agilysys, is the Chief Executive Officer of MAK Capital.

“We are pleased to expand our relationship with MAK Capital as we look to best position our business and fortify our balance sheet during this period of uncertainty,” said Ramesh Srinivasan, Agilysys’ President and Chief Executive Officer. “This investment will provide us the necessary capital to reinforce product and customer service focus and increase our competitive advantage as we manage through the current economic environment. We remain confident in our strategic plan and long-term prospects and believe this investment will permit us to carry forward our innovation and other growth initiatives.”

Michael Kaufman, the Chairman of the Board of Directors of Agilysys and the Chief Executive Officer of MAK Capital, said “We are excited to extend our partnership with Agilysys. This additional capital significantly strengthens the Company’s financial profile and enables management to execute against strategic objectives.”

MAK Capital will purchase $35 million of convertible preferred stock that carries a 5.25% dividend, which will be payable in cash or in-kind for up to 50% of any dividend payment, at Agilysys’ election. The preferred stock will be convertible into shares of Agilysys common stock at a conversion price of $20.1676 per share, representing a premium of 15% to Agilysys thirty-trading day volume-weighted average price (VWAP). On an as-converted basis, together with MAK Capital’s existing common shares of Agilysys, MAK Capital will now own approximately 16.28% of pro forma common shares outstanding. The completion of the transaction is subject to customary closing conditions and will not occur prior to May 22, 2020, unless otherwise agreed by the parties.

Agilysys will file a Form 8-K with the Securities and Exchange Commission containing additional information regarding the terms of the convertible preferred stock.

Transaction Committee

A special transaction committee of independent directors (the “Transaction Committee”) was established by the Board of Directors of Agilysys to review, evaluate and consider the proposed terms of the convertible preferred investment, as well as other alternatives available to the Company, and determine if the convertible preferred investment is in the best interests of the Company and its shareholders. Following an evaluation of the convertible preferred investment proposal and other potential financing alternatives, the Transaction Committee concluded that the convertible preferred investment was in the best interests of the Company and its shareholders. Accordingly, the Transaction Committee and its financial and legal advisors engaged in extensive negotiations with MAK Capital with respect to various aspects of the investment, including the proposed pricing. Having received the unanimous recommendation of the Transaction Committee, the Board of Directors of Agilysys (excluding Michael Kaufman, who did not participate in deliberations) determined that the convertible preferred investment is in the best interests of the Company and its shareholders. Ramesh Srinivasan, Agilysys’ President and Chief Executive Officer, was not involved in the deliberations, but was involved in the confirmatory vote.

Advisors

J. Wood Capital Advisors LLC acted as financial advisor, and Paul, Weiss, Rifkind, Wharton & Garrison LLP acted as legal advisor to Agilysys. MAK Capital was advised by Akin Gump Strauss Hauer & Feld LLP.

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