A Medical Device Daily Staff Report
Orthofix International (Boston) reported that in addition to its regularly scheduled debt payments, it made a $7 million prepayment in advance of the scheduled maturity, permanently reducing its current credit facility by that amount.
"This is the second debt repayment we have made ahead of the schedule maturity date within the last three months. It demonstrates not only our desire to continue deleveraging our balance sheet, but our improved cash generation over the last few months," said Orthofix Executive VP/CFO Bob Vaters.
Vaters added that with the expected continuation of cash flow improvements, the company will look for additional opportunities to pay down debt early, increasing its flexibility to execute its operating plan.
The company also announced reported plans to close its Huntersville, North Carolina, office by the end of February 2010. The relocation of the corporate accounting and finance functions from this facility was completed in 2008, and the remaining employees will be relocated prior to the expiration of the current lease in February of next year.
"The consolidation of our operations in Huntersville is part of the broad-based effort to reduce operating expenses that we began a year ago," said Alan Milinazzo, president/CEO of Orthofix. "We have already consolidated operations and reduced the number of facilities we previously occupied in Germany and in the UK, and the previously announced reorganization at our Blackstone Medical business unit began at the end of last year. The consolidation of Blackstone's operations in New Jersey and Massachusetts into our Texas facility is scheduled to be completed by the first part of 2010, and we will continue to look for opportunities to optimize our operating efficiency and reduce expenses."
Orthofix previously reported in December that it had made a $10 million partial debt repayment ahead of the scheduled maturity date. Prior to that, the company and its partner, the Musculoskeletal Transplant Foundation (Edison, New Jersey), reported the completion of a major development milestone related to Trinity Evolution, a new stem cell-based allograft, and accelerated the expected launch date of this new product to June of 2009. Additionally, the company said it recently 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 1Q09.
Orthofix has been involved in a power struggle with shareholder Ramius Capital (New York), which is seeking to make substantial changes to the composition of Orthofix's board of directors.