Proxy advisory firm backs Orthofix shareholder's call for special meeting

By Lisa Kerner

Charlotte, N.C., Jan. 20 - Orthofix International NV shareholders were advised by RiskMetrics Group/ISS to vote in favor of a shareholder proposal calling for the company to hold a special meeting for the purpose of changing Orthofix's board of directors, according to a news release from Ramius LLC.

Ramius said that at the special meeting, shareholders "will be able to elect board members that will represent their best interests."

Orthofix, in response to Ramius, said the hedge fund may be misleading shareholders because the proxy advisory firm's report did not analyze removing and replacing board members. RiskMetrics Group simply does not oppose Ramius' request to call a special meeting, Orthofix said.

In a statement released on Tuesday, James F. Gero, chairman of the Orthofix board of directors, expressed concern that "shareholders may be misled into believing that RiskMetrics has already rendered judgment on Ramius' intention to replace members of our board."

It was previously reported that Ramius is attempting to remove from the Orthofix board James F. Gero, Peter Hewet, Alan Milinazzo and Walter P. von Wartburg.

Ramius, with a 5.1% stake in Orthofix, wants to replace the four 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 said previously that calling a special meeting would be "duplicative, distracting to management and a waste of shareholder resources."

Ramius blamed Orthofix's 2006 acquisition of Blackstone Medical for the company's significant operating losses and highly levered balance sheet. Selling Blackstone would allow Orthofix to remain in compliance with its debt covenants and significantly improve shareholder value, according to Ramius.

Gero said Orthofix is committed to its strategic plan, which includes "strong support" for the Blackstone spine business.

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

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