BOSTON, Feb 09, 2009 (BUSINESS WIRE) -- Orthofix International N.V. (NASDAQ: OFIX) (the Company) announced today
that the Chairman of the Company's Board of Directors, James F. Gero,
sent a letter, included below, to Ramius LLC raising concerns about
another of Ramius's nominees for Orthofix's Board of Directors.
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Jeffrey Smith
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Ramius Capital
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599 Lexington Ave.
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New York, NY 10022
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Dear Mr. Smith:
I am writing to you on behalf of the Board of Directors of Orthofix
International to question your nomination of Steven J. Lee to our Board.
We wish to register our concern about the perception that might be
created by Mr. Lee's presence on our Board.
Based on publicly available documents we understand that Mr. Lee founded
PolyMedica Corporation, a Massachusetts-based medical products company,
where he served as President, CEO and Chairman of the Board from 1990 to
2002. In 1998, during Mr. Lee's tenure, the federal government began an
investigation of PolyMedica's Florida-based subsidiaries, Liberty
Medical Supply and Liberty Home Pharmacy. In 2001 two qui tam, or
whistleblower, lawsuits were filed in federal court in Miami and Boston
against PolyMedica Corporation and its subsidiaries. These lawsuits
alleged, among other things, that the subsidiaries violated the False
Claims Act by submitting claims to Medicare without proper documentation
of medical necessity, resulting in overbilling to federal health care
programs.
In 2002, Mr. Lee left PolyMedica after a Medicare fraud investigation
was initiated by the United States Department of Justice against the
company. In 2004, after Mr. Lee's departure, PolyMedica paid a $35
million settlement to the United States government to resolve these
civil allegations, as well as to settle administrative sanctions related
to the alleged misconduct. This settlement concluded an investigation
lasting approximately five years that included onsite searches of
PolyMedica's subsidiary operations by FBI agents in response to federal
search warrants, the removal of company documents, and subsequent
shareholder lawsuits.
Frankly, we are concerned that Mr. Lee's presence on our Board would
detract from the positive steps we have taken related to Orthofix's
recent implementation of Integrity Advantage(TM),
our Corporate Compliance and Ethics Program. This program incorporates
industry best practices for compliance, and is structured to meet U.S.
Sentencing Commission Guidelines for effective organizational compliance
and ethics programs. Under the leadership of the company's new Senior
Vice President and Chief Compliance Officer, a health care attorney with
significant regulatory compliance experience whose hiring was approved
by the Board, Orthofix's Integrity Advantage program is designed
to promote compliance with the highest level of legal and ethical
business practices throughout the company's domestic and international
businesses.
As you know, our compliance function is not the only part of the company
we have improved. On December 15th 2008, Orthofix announced
that the company and its partner, the Musculoskeletal Transplant
Foundation (MTF), had achieved a major milestone in their efforts to
develop a new stem cell-based allograft. 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. Two weeks later, Orthofix made a $10 million partial debt
repayment, ahead of the scheduled maturity date, which increased the
company's flexibility in executing its operating plan. It is the Board's
judgment that additional positive developments are on the near term
horizon for Orthofix, including its Blackstone subsidiary.
On January 28th, I sent you a letter questioning the nomination of Peter
Feld, a 29-year-old Ramius nominee and employee with no health care
experience and a strikingly thin (and disconcerting) record of service
on just two Boards: Sharper Image, an American retailing icon which
filed for bankruptcy and eventual liquidation shortly after Mr. Feld's
departure, and CPI Corp, recently threatened with delisting by the New
York Stock Exchange. Particularly in a difficult operating environment,
it is unclear what value either Mr. Lee or Mr. Feld would bring to our
business. Frankly, the Board is deeply troubled by the respective
backgrounds of both Mr. Lee and Mr. Feld, as well as Ramius's efforts to
impose these two people on our team, our culture and our organization.
In addition to Mr. Lee and Mr. Feld, Ramius has also nominated Charles
T. Orsatti and J. Michael Egan to our Board. While we think Mr. Lee and
Mr. Feld offer no obvious benefit to our broad shareholder base, and
would clearly damage our Board and the reputation of our company, we are
prepared to formally meet and interview both Mr. Orsatti and Mr. Egan at
the earliest available date.
Sincerely,
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James F. Gero
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Chairman, Board of Directors
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Orthofix International NV
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cc: Orthofix Board of Directors
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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, the Cleveland Clinic Foundation, 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
Ramius Capital and certain of its affiliates have filed a preliminary
proxy statement with the SEC in connection with a special general
meeting of shareholders at which Ramius proposes to make changes to the
composition of Orthofix's board of directors. Orthofix intends to file
with the SEC a proxy statement in opposition to Ramius' proposals.
SHAREHOLDERS ARE URGED TO READ ORTHOFIX'S DEFINITIVE PROXY MATERIALS AND
ANY OTHER RELEVANT SOLICITATION MATERIALS FILED WITH THE SEC WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
Investors and shareholders may obtain (when they are available) a free
copy of proxy statements filed with the SEC by Orthofix at the SEC's
website at www.sec.gov
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 International N.V. 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 by security holdings or otherwise, is set forth in Orthofix's
Revocation Solicitation Statement dated January 12, 2009, which may be
obtained free of charge at the SEC's website at www.sec.gov
and Orthofix's website at www.orthofix.com.
More current information regarding such persons, as well as each such
person's respective interests in Orthofix by security holdings or
otherwise, will be set forth in the definitive proxy statement materials
to be filed with the SEC and distributed to shareholders by Orthofix as
described above.
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