Form 4: MAK Capital Executes Zero-Cost Collar on Agilysys Stock

MAK Capital Fund LP entered into a zero-cost collar arrangement involving 327,600 shares of Agilysys, Inc., using call and put options.

Summary

• MAK Capital Fund LP, an affiliate of MAK Capital One LLC, has entered into a zero-cost collar arrangement on 327,600 shares of Agilysys, Inc. common stock.
• This arrangement involves writing European call options and purchasing European put options.
• The contract has an initial hedge period that ended on December 15, 2024.
• The options will expire in 16 equal increments starting on March 3, 2026.
• The contract is expected to be physically settled by delivery of shares unless MAK Fund elects to pay cash.
• The call option strike price is $144.2183 and the put option strike price is $119.2982.

Sentiment

Score: 7

Explanation: The document describes a standard financial transaction, a zero-cost collar, which is neither particularly positive nor negative. The sentiment is neutral to slightly positive due to the risk management aspect.

Positives

• The zero-cost collar strategy allows MAK Capital to hedge its position in Agilysys stock without an upfront cost.
• The staggered expiration dates provide flexibility in managing the position over time.

Risks

• The value of the options and the underlying shares could fluctuate, impacting the final settlement value.
• The contract's complexity introduces potential risks related to settlement and market movements.

Future Outlook

The contract will expire in 16 equal increments over a series of expiration dates expected to commence on March 3, 2026. The contract is expected to be physically settled by delivery of the Shares unless MAK Fund elects to pay cash to settle its obligations.

Management Comments

• Michael A. Kaufman, managing member of MAK Capital, disclaims beneficial ownership except to the extent of its pecuniary interest.
• Mr. Kaufman has been deputized to represent MAK Fund and MAK Capital on the board of directors of the Issuer.

Industry Context

This type of transaction is common among institutional investors to manage risk and potentially generate income from their stock holdings. It is a sophisticated strategy that requires careful monitoring and execution.

Comparison to Industry Standards

• Zero-cost collars are a common hedging strategy used by institutional investors and hedge funds to manage risk in their equity portfolios.
• The use of European-style options is standard in these types of transactions, providing a defined expiration date.
• The size of the transaction, involving 327,600 shares, is significant but not unusual for a fund of MAK Capital's size.
• Similar strategies are employed by firms like Citadel, Millennium Management, and Renaissance Technologies to manage their exposure to market fluctuations.

Stakeholder Impact

• The transaction may have a minor impact on the share price of Agilysys, Inc., depending on market conditions and the settlement of the options.
• The transaction is primarily a risk management strategy for MAK Capital and its investors.

Next Steps

• The options will expire in 16 equal increments starting on March 3, 2026.
• MAK Fund will either deliver shares or pay cash to settle the contract.

Key Dates

Keywords

zero-cost collar, options, derivatives, hedging, Agilysys, MAK Capital, call option, put option, stock