UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934
Filed by
the Registrant x
Filed by
a Party other than the Registrant o
Check the
appropriate box:
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Preliminary
Proxy Statement
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Confidential, for Use of the
Commission Only (as permitted by Rule
14a-6(e)(2))
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Definitive
Proxy Statement
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x
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Definitive
Additional Materials
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Soliciting
Material Pursuant to §240.14a-12
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ORTHOFIX
INTERNATIONAL N.V.
(Name of
Registrant as Specified In Its Charter)
(Name
of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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No
fee required.
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Fee
computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
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(1)
Title of each class of securities to which transaction applies:
(2)
Aggregate number of securities to which transaction applies:
(3)
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to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4)
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Fee paid previously with preliminary
materials.
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as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous filing by
registration statement number, or the Form or Schedule and the date of its
filing.
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Schedule or Registration Statement No.:
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(4) Date
Filed:
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Contact:
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Dan
Yarbrough, Vice President of Investor
Relations
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danyarbrough@orthofix.com
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(617)
912-2903
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Orthofix
International Urges Shareholders
to
Reject Activist Hedge Fund’s Proposals
PROXY
Governance Supports Board; RiskMetrics Follows Frequent Practice of Splitting
Recommendation in Support of Dissidents
BOSTON,
March 21, 2009 – Orthofix International N.V. (NASDAQ: OFIX) (the Company) today
urged shareholders to reject the proposals put forth by Ramius in their ongoing
proxy contest. Earlier this week, the independent proxy advisory firm PROXY
Governance, Inc. recommended that shareholders reject each of the activist hedge
fund’s proposals, 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.”
Another
proxy advisory firm, RiskMetrics Group (RMG), made a split recommendation in
favor of three of the four Ramius nominees. This is a common practice
for RMG, which noted in their report that “the burden of proof on the dissidents
is lower.” Whereas PROXY Governance found “the profound absence of a
plan” to be a major factor that shareholders should weigh in evaluating Ramius’
proposals, RMG appeared to hold the dissident shareholder to a lower
standard. In their report, RMG stated they “will not require from the
dissidents a detailed plan of action, nor will we require that their plan is
preferable to the incumbent plan.”
In
assessing Ramius’ key concerns RMG’s report stated:
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“Though
Ramius has voiced concerns about the company’s ability to meet its debt
coverage ratios given poor performance at the Blackstone division, the
company does not seem to be in any imminent danger of violating its
covenants. Moreover, the fact that the company has generated
positive operating cash flow in each of the last five years mitigates the
risk of violating leverage ratios as the company can repay debt by
curtailing investment activities, if
needed.”
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“Orthofix’s
G&A and corporate overhead costs as percentage of revenue have
remained largely unchanged since the Blackstone acquisition in
2006.”
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“Also
while Ramius had initially advocated for the immediate sale of the
Blackstone division, analysts seems to be more supportive of the
turnaround plan rather than an immediate
sale.”
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Orthofix
also expressed significant concern with RMG’s recommendation to remove the
Chairman of the Company’s Board while at the same time recommending the
nomination of Peter Feld. RMG’s report acknowledged that “Peter Feld
has the least company/sector experience” while appearing to be unmoved by
Orthofix’s previously announced concerns regarding factual errors in Ramius’
publicly released summary of the Company Chairman’s background and
experience.
Mr. Feld
is a 30-year-old employee at Ramius who has no health care or operating
experience. The Company is also concerned that Mr. Feld’s previous
experience on the boards of two public companies appears to be disconcertingly
thin and unproductive. At the same time, RMG has recommended that
shareholders remove the Chairman of the Company’s Board, James
Gero. Mr. Gero has served on Orthofix’s Board for the last 14 years,
and has overseen the key changes made at the Company resulting in the positive
improvements acknowledged in RMG’s own report.
“RMG
notes the progress we have made in key areas, and acknowledges recent
indications of shareholder and industry analyst support for our turnaround
plan. But, at the same time they are recommending that our
shareholders remove members of our Board who have presided over and led this
turnaround plan, and replace them with individuals who we believe, in at least
in one case, would bring far less relevant experience and value to our
Board. As such, the recommendations RMG make in their report seem
inconsistent with their acknowledgement of the progress we have
made,” stated Alan Milinazzo, President and CEO of Orthofix.
Mr.
Milinazzo concluded by saying, “We are pleased with the feedback we have
received from shareholders who understand this market well and the supportive
recommendation issued by PROXY Governance.”
Recent
Positive Announcements by Orthofix
In
contrast to Ramius’ lack of “specific strategies” for Orthofix, the current
Board of Directors and management team have put a sound strategy in place that
is showing progress and improved performance at Blackstone. 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. These encouraging results followed a number
of other recent positive developments, including:
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On
February 11, 2009, Orthofix announced the acceleration of the launch date
of Trinity® Evolution™, 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™ pedicle screw system and the PILLAR™ 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.
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Industry
Analysts Recognize Progress
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 questions 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
“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
Orthofix
continues to urge its shareholders to vote on the BLUE proxy card as recommended
by the Board of Directors and as also recommended by PROXY
Governance.
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).