Orthofix shareholders back call for special meeting; company questions board nominee

By Jennifer Chiou

New York, Jan. 29 - Orthofix International NV announced that Ramius LLC delivered shares representing about 55% of its outstanding stock in support of a special general meeting of shareholders.

At the special meeting, Ramius plans to present proposals to make substantial changes to Orthofix's board of directors.

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, now with a 5.3% 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.

"The strong support we received from Orthofix shareholders clearly demonstrates that shareholders demand the opportunity to exercise their right to vote," Ramius partner Jeffrey C. Smith stated in a news release. "Critical strategic and operational decisions must be made over the following few months and, therefore, we believe it is incumbent upon the current board to embrace the request of shareholders and promptly schedule the special meeting as soon as practicable."

Ramius needed at least 10% of shareholders to call the special meeting.

In response, James F. Gero, chairman of the Orthofix board, questioned the qualifications of Feld in a letter to Ramius.

Gero cited Feld's age - 29 - and pointed out that Feld is neither a partner nor a senior executive listed on Ramius' web site. He added, "Feld's tenure on the boards of public companies is not only limited, but has on more than one occasion coincided with or been followed by significant adverse events for those companies."

On Jan. 20, Orthofix 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.

Ramius previously 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 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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