BOSTON, Mar 09, 2009 (BUSINESS WIRE) -- Orthofix International N.V. (NASDAQ: OFIX) (the Company) announced today
it sent a letter to its shareholders, which is included below, opposing
the proposal being made by Ramius LLC to nominate Peter Feld to the
Company's Board of Directors at a Special Meeting of Shareholders
scheduled for April 2, 2009.
Dear Fellow Orthofix Shareholder:
As you know, Orthofix will hold a Special Meeting of Shareholders on
April 2, 2009. The purpose of this meeting is to consider a number of
proposals put forward by Ramius, an activist hedge fund. One of Ramius'
proposals involves their nomination of Peter Feld to replace a current
member of Orthofix's Board of Directors. In our previous communications
we have expressed legitimate concerns about Ramius' nomination of Feld,
yet they continue to promote him as a candidate while ignoring our
repeated offers to interview two of their other nominees, Charles
Orsatti and J. Michael Egan. Instead of addressing our concerns about
Feld's lack of qualifications and experience, which are based on
publicly available facts, Ramius characterizes them as "baseless
accusations." We want you to have the facts about Feld and Ramius
itself. We continue to urge you to reject the Ramius solicitation and
instead vote Orthofix's BLUE proxy card.
Who is Peter Feld and why does Ramius believe their 29-year-old
employee with no operating or healthcare experience can add value to the
Orthofix Board?
Based on his own biography in Ramius' proxy materials, Peter Feld has no
operating or healthcare experience. In fact, other than a short tenure
with Ramius and previous experience as an investment banking analyst
with Bank of America, it is unclear what value this 29-year-old
individual could bring to the Orthofix Board. Feld serves on the Board
of CPI Corp., a portrait studio company whose stock price has dropped
more than 50% over the last seven months and is currently
in danger of being delisted by the New York Stock Exchange (NYSE).
Feld also had a five-month stint as a member of the Board of Sharper
Image prior to the company filing for
bankruptcy. He ascended to the Sharper Image Board as the result
of a previous Ramius activist campaign, as described below, and this
track record should cause Orthofix shareholders to question Ramius'
judgment as well as their commitment to the companies in which they take
activist positions.
When Feld resigned from the Board of
Sharper Image after a mere five months of service, he wrote to
the other Board members with the following resignation letter:
"As you know, I have been considering for some time whether to resign
from the Board of Sharper Image. I have tremendous respect for the
progress you and the team have made in turning around the company. Given
the size of Ramius' portfolio and the other investments I am involved
in, continuing as an active member of the Board of Directors of Sharper
Image is no longer the best use of my
time and resources. As a result, I am resigning from the Board of
Directors of Sharper Image, effective the close of business on Friday,
January 25, 2008."
Emphasis added; Source: Sharper Image 8-K, January 29, 2008, exhibit
9.01, available at: http://www.sec.gov/Archives/edgar/data/811696/000118143108005844/0001181431-08-005844-index.idea.htm
This letter has caused great concern among our Board members for a
number of reasons. First, Feld writes of "considering for some time
whether to resign," despite the fact that his
entire tenure on the Board was only five months long.
Second, he cites his other investments and obligations as a reason for
resigning. Orthofix shareholders should be concerned about this level of
"commitment" being proposed for our Board. Third, Feld congratulates the
Board for progress "in turning around the
company," a sentiment that he expressed the
month before Sharper Image filed for bankruptcy protection. This
hardly appears to demonstrate either good business judgment or an
understanding of best practices in corporate governance matters.
In contrast, the current Orthofix Board is comprised of highly qualified
individuals specifically chosen for their business and healthcare
expertise. This Board has also implemented best-in-class corporate
governance practices to guide Orthofix, including:
-
No staggered or classified Board of Directors; all directors stand for
election annually,
-
The roles of Chairman and CEO are held by separate individuals,
-
The Audit, Compensation, and Nominating & Governance Committees are
comprised of independent directors,
-
The Board regularly meets without the CEO at least two times per
quarter,
-
The company uses outside advisers as necessary,
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The Board conducts regular CEO performance reviews,
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A Board education program is in place,
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A Board self-assessment is conducted once per year,
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Shareholder rights are promoted by the company's articles of
association, including
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No anti-takeover defenses,
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No supermajority voting requirements,
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Shareholders can call a special meeting,
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Shareholder vote required to change articles of association.
We do not believe that Feld's experience will bring value to
Orthofix shareholders
Significant recent indications of progress and improved performance at
Blackstone validate our strategy. On February 12, the Company released
its fourth quarter 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 as compared with the third
quarter of 2008. These encouraging results followed a number of other
recent positive developments, including:
-
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.
-
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.
-
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.
-
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.
Further, industry analysts have recognized Orthofix's progress and, as a
result, have questioned Ramius' previously stated intent to sell
Blackstone.
"Orthofix is in a position where it must execute its current strategy
through 2009 to achieve its guidance. Ramius, an investment management
firm with a stake in OFIX, has made an aggressive push to hold a special
shareholders meeting to call into question the suitability of the
Blackstone acquisition, and is attempting to appoint four new
individuals to the Orthofix board of directors. 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."
Canaccord Adams, February 18, 2009
"On one hand, we agree that the Ramius proposal to sell the Blackstone
unit would likely result in an immediate increase in shareholder value,
but this may not necessarily be the best long-term strategic move for
the company. We believe management is taking appropriate steps to
successfully turn around its spine business."
Susquehanna International Group, February 24, 2009
"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."
Jefferies & Company, Inc, February 18, 2009
Reject the Ramius solicitation and vote the Company's BLUE proxy card.
Orthofix is on the right track today and we believe Ramius lacks
strategic focus and business discipline. We strongly recommend that you
reject Ramius' attempts to derail this progress through the nomination
of highly problematic director candidates, and lack of strategic focus
and business discipline. Vote the Company's BLUE proxy card.
Sincerely,
Orthofix Board of Directors
For assistance in voting your shares, please call
Georgeson
199 Water Street, 26th Floor
New York, NY 10038
Toll free (800) 323-4133
Banks and Brokerage Firms please call (212) 440-9800
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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 definitive
proxy statement with the SEC in connection with a special general
meeting of shareholders of Orthofix International N.V. ("Orthofix") to
be held on April 2, 2009 at which Ramius proposes to make changes to the
composition of Orthofix's board of directors. Orthofix has filed 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 BY ORTHOFIX WITH THE SEC
BECAUSE THEY WILL 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