Orthofix shareholders urged by Ramius to call special meeting, replace board members

By Lisa Kerner

Charlotte, N.C., Jan. 12 - Orthofix International NV investor Ramius LLC asked fellow shareholders to support its attempt to call a special meeting for the purpose of making changes to Orthofix's board of directors.

The company said Ramius' efforts to elect up to four of its nominees would damage shareholder value.

Ramius wants to remove James F. Gero, Peter Hewet, Alan Milinazzo and Walter P. von Wartburg from the Orthofix board and replace them with:

• J. Michael Egan, chief executive officer of Steadman Hawkins Research Foundation, an orthopedic research organization;

• Peter A. Feld, Ramius managing director;

• Steven J. Lee, president of SL Consultant Inc., a private investment firm and hedge fund; and

• Charles T. Orsatti, managing partner of Fairfield Capital Partners, Inc., a private equity fund.

Orthofix shareholders holding 10% or more of all votes entitled to be cast are asked by Ramius to submit written requests in favor of calling the meeting, it was previously reported in a schedule 14A filed with the Securities and Exchange Commission.

According to Ramius, it owns 854,980 of the 855,192 shares of common stock needed to require Orthofix to call the special meeting.

Orthofix said calling a special meeting would be "duplicative, distracting to management and a waste of shareholder resources" given the company's current governance practices of annually electing its entire board.

At odds over Blackstone

"Due to the ill-conceived and poorly executed acquisition of Blackstone Medical in 2006, the company faces significant operating losses and a highly-levered balance sheet with debt covenants that begin to tighten in late 2009," Ramius partner Jeffrey C. Smith said in a news release. "The shareholders of Orthofix deserve better representation and we believe that it is necessary to act now in order to prevent further erosion of shareholder value."

In a Jan. 12 letter to shareholders included in the release, Ramius said it believes Orthofix should immediately explore and execute a sale of Blackstone. A sale would allow Orthofix "to remain in compliance with its debt covenants, to begin repaying the debt, and to significantly improve shareholder value."

Orthofix, in a Jan. 12 letter to Smith, disagreed with Ramius' claim that Orthofix shareholders would benefit from the sale of the spine business.

Chairman James F. Gero said Orthofix is reviewing strategic alternatives, including those related to Blackstone, with the assistance of Morgan Stanley. Gero also said the company is making "significant progress" in executing a sound strategic plan that he believes will maximize shareholder value.

Orthofix is a Curacao, the Netherlands Antilles-based diversified orthopedic products company.

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