BOSTON, Mar 30, 2009 (BUSINESS WIRE) -- As the April 2nd voting deadline approaches in its ongoing
proxy contest with Ramius, Orthofix International N.V. (NASDAQ: OFIX)
(the Company) cited the support of key proxy advisory firms, the
repeated flip-flop in positions advanced by Ramius, and what the Company
believes are the poor qualifications of certain of Ramius' nominees for
the Orthofix Board, as it urged shareholders to reject the activist
hedge fund's proposals.
Ramius' statements throughout this contest have shown a flip-flopping of
positions on the major issue of how Blackstone Medical should be
addressed as part of the Orthofix business strategy. In December, Ramius
launched this proxy contest stating its belief that the Board should "explore
and execute a sale of Blackstone at the highest possible price." Key
industry analysts have questioned that position, however, with the
analyst at Canaccord Adams stating in February, "We believe any
attempt to divest the Blackstone business in a fire sale would disrupt
Orthofix's current strategies and limit the company's near-term and
long-term potential." Ramius subsequently flip-flopped its position
regarding Blackstone, stating in their late February definitive proxy
statement "the Ramius Nominees have no present plans to pursue
specific strategies at this time..."
Ramius' lack of specific strategies for Orthofix was also noted by two
independent proxy advisory firms in their reports. PROXY Governance
urged shareholders to reject all of the Ramius nominees for the Orthofix
Board, stating, "The problem with the dissident campaign is not an
inability to evaluate what went wrong, but the profound absence of a
plan to effect a credible recovery." Likewise, Glass Lewis
recommended against 3 of 4 Ramius nominees, calling the Ramius plan "particularly
light on details" and stating "the Dissident does not have a plan
to pursue specific operating strategies to address its concerns
regarding the Company's performance."
Orthofix has continued to question the qualifications of certain of the
nominees that Ramius has recommended for the Orthofix Board. Steven Lee
served on the Board of Directors of ICN Pharmaceutical (now called
Valeant Pharmaceutical International) from 2001 to 2004. Following the
initiation of an investigation by the SEC of Valeant, Valeant restated
nearly a decade of financial statements as a result of inappropriate
backdating of stock options. This activity apparently continued during
Mr. Lee's tenure as a Director and a member of Compensation Committee.
Further, Risk Metrics Group (RMG) recommended against Lee "due to
concerns about regulatory issues at PolyMedica Corporation where he was
the CEO until 2002."
Orthofix is also concerned about Peter A. Feld, a 30-year-old Ramius
employee with no healthcare or operating experience. Feld's
disconcertingly thin and apparently unproductive experience on the
boards of two public companies includes Sharper Image, which filed for
bankruptcy protection shortly after Mr. Feld's five month tenure. In
their recommendation for Feld, RMG said he "has the least
company/sector experience" of the Ramius nominees.
By executing the strategy of the current Board of Directors, Orthofix
has made significant progress in recent months. As noted by an industry
analyst at Jefferies & Company, "In our opinion, OFIX's decision
to judiciously employ improving cash flows to pay down debt is sound.
OFIX has steadily made prepayments to reduce the principle amount owed
and the strategy to further delever as cash flows improve is crucial to
avoid a covenant breach as the leverage ratio will come down to 3.25x in
Q4:09 and 2.85 in Q1:10. OFIX's projection of an improving EBITDA run
rate is consistent with our model, and we do not expect OFIX to break
any covenants."
On March 24, 2009, the Company announced it had made a third, $5
million, partial debt repayment ahead of maturity. The Company has made
a number of other recent positive announcements, including improved
performance at Blackstone.
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On February 12, the Company released its full year 2008 results and
2009 guidance, showing substantial improvement in the operating
performance of the spinal implant and biologic business, including
increased revenue, a higher gross profit margin and lower adjusted
operating expenses.
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On February 11, 2009, Orthofix announced the acceleration of the
launch date of Trinity(R) Evolution(TM), the next generation adult
stem cell-based allograft developed in collaboration with the
Musculoskeletal Transplant Foundation (MTF). The limited market
release is now expected to occur by May 1st of this year, two months
ahead of schedule. This development followed a December 15, 2008
announcement that Orthofix and MTF had achieved a major development
milestone, which was also ahead of schedule.
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Orthofix also initiated the limited market release of two new
products, the Firebird(TM) pedicle screw system and the PILLAR(TM) SA
interbody device, both of which are expected to be fully launched in
the first quarter of 2009.
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In December 2008 Orthofix made a $10 million partial debt repayment,
ahead of the scheduled maturity date. At December 31, 2008 our
debt-to-EBITDA ratio as defined in our amended credit facility was 3.4
versus the maximum allowable ratio of 4.0. This gave us approximately
$49 million of available debt capacity at December 31, 2008. When the
maximum allowable debt-to-EBITDA ratio decreases to 3.5 at September 30th
of this year, we expect the last 12 months' total EBITDA used in the
calculation of the leverage ratio to be significantly higher than the
amount used in the calculation at December 31, 2008. This is because
the calculation will no longer include the increase in inventory
reserve of $11.5 million recorded in the third quarter of 2008.
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In February 2009, the Company made a second, $7 million, partial debt
repayment and announced a consolidation plan that will create cost
savings and synergies between the operating groups of the Company.
"Independent industry analysts and proxy advisory firms have confirmed
what we have been telling our shareholders," said Orthofix CEO Alan
Milinazzo. "Furthermore, the current Board is a highly qualified group
with a prudent strategic plan for Orthofix, and we are confident that
there will be more positive progress to come. We urge shareholders to
vote the Company's BLUE proxy card and reject the proposals of Ramius, a
shareholder that has been invested in our Company for only the past six
months."
Orthofix continues to urge its shareholders to vote on the BLUE proxy
card as recommended by the Board of Directors.
About Orthofix
Orthofix International, N.V., a global medical device company, offers a
broad line of minimally invasive surgical, and non-surgical, products
for the spine, orthopedic, and sports medicine market sectors that
address the lifelong bone-and-joint health needs of patients of all
ages-helping them achieve a more active and mobile lifestyle. Orthofix's
products are widely distributed around the world to orthopedic surgeons
and patients via Orthofix's sales representatives and its subsidiaries,
including BREG, Inc. and Blackstone Medical, Inc., and via partnerships
with other leading orthopedic product companies. In addition, Orthofix
is collaborating in R&D partnerships with leading medical institutions
such as the Orthopedic Research and Education Foundation, Rutgers
University, Texas Scottish Rite Hospital for Children and National
Osteoporosis Institute. For more information about Orthofix, please
visit www.orthofix.com.
Forward-Looking Statements
This communication contains certain forward-looking statements under the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements, which may include, but are not limited to, statements
concerning the projections, financial condition, results of operations
and businesses of Orthofix and its subsidiaries and are based on
management's current expectations and estimates and involve risks and
uncertainties that could cause actual results or outcomes to differ
materially from those contemplated by the forward-looking statements.
Factors that could cause or contribute to such differences may include,
but are not limited to, risks relating to the expected sales of its
products, including recently launched products, unanticipated
expenditures, changing relationships with customers, suppliers and
strategic partners, risks relating to the protection of intellectual
property, changes to the reimbursement policies of third parties,
changes to and interpretation of governmental regulation of medical
devices, the impact of competitive products, changes to the competitive
environment, the acceptance of new products in the market, conditions of
the orthopedic industry and the economy, corporate development and
market development activities, including acquisitions or divestitures,
unexpected costs or operating unit performance related to recent
acquisitions and other factors described in our annual report on Form
10-K and other periodic reports filed by the Company with the Securities
and Exchange Commission.
Important Additional Information
Orthofix International N.V. ("Orthofix") has filed a definitive proxy
statement, dated February 26, 2009, with the SEC in connection with a
special general meeting of shareholders of Orthofix to be held on April
2, 2009 at which Ramius Capital and certain of its affiliates propose to
make changes to the composition of Orthofix's board of directors.
SHAREHOLDERS ARE URGED TO READ ORTHOFIX'S DEFINITIVE PROXY MATERIALS AND
ANY OTHER RELEVANT SOLICITATION MATERIALS FILED BY ORTHOFIX WITH THE SEC
BECAUSE THEY CONTAIN IMPORTANT INFORMATION. Investors and shareholders
may obtain a free copy of the proxy statement and other materials filed
by Orthofix with the SEC at the SEC's website at www.sec.gov,
at Orthofix's website at www.orthofix.com,
or by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY
10038 or by calling (212) 440-9800 (bankers and brokers) or toll-free
(800) 323-4133 (all others).
Orthofix and its directors and certain executive officers are
participants in the solicitation of proxies in connection with the
special general meeting of shareholders. The names of such persons are:
James F. Gero, Peter J. Hewett, Jerry C. Benjamin, Charles W. Federico,
Dr. Guy J. Jordan, Ph.D., Thomas J. Kester, CPA, Alan W. Milinazzo,
Maria Sainz, Dr. Walter P. von Wartburg, Kenneth R. Weisshaar, Robert S.
Vaters, Michael Simpson, Bradley R. Mason, Raymond C. Kolls, J.D., and
Michael M. Finegan. Information regarding such participants, as well as
each such person's respective interests in Orthofix (whether through
ownership of Orthofix securities or otherwise), is set forth in
Orthofix's definitive proxy statement dated February 26, 2009, which may
be obtained free of charge at the SEC's website at www.sec.gov,
Orthofix's website at www.orthofix.com,
or by contacting Georgeson, 199 Water Street, 26th Floor, New York, NY
10038 or by calling (212) 440-9800 (bankers and brokers) or toll-free
(800) 323-4133 (all others).
SOURCE: Orthofix International N.V.
Orthofix International N.V.
Dan Yarbrough, 617-912-2903
Vice President of Investor Relations
danyarbrough@orthofix.com
Copyright Business Wire 2009