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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
to
SCHEDULE 14D-9
Solicitation/Recommendation Statement
Pursuant to Section 14(d)(4) of the
Securities Exchange Act of 1934
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PAINEWEBBER R&D PARTNERS II, L.P.
(Name of Subject Company)
PAINEWEBBER R&D PARTNERS II, L.P.
(Name of Person Filing Statement)
LIMITED PARTNERSHIP UNITS
(Title of Class of Securities)
NONE
(CUSIP Number of Class of Securities)
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Dhananjay M. Pai
President
PaineWebber Development Corporation
1285 Avenue of the Americas
New York, New York 10019
(212) 713-2000
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications
on Behalf of the Person(s) filing Statement)
WITH A COPY TO:
James M. Dubin, Esq.
Paul, Weiss, Rifkind, Wharton & Garrison
1285 Avenue of the Americas
New York, New York 10019-6064
(212) 373-3000
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This Amendment No. 1 amends and supplements the
Solicitation/Recommendation Statement on Schedule 14D-9 (the "SCHEDULE
14D-9") filed with the Securities and Exchange Commission (the
"COMMISSION") by PaineWebber R&D Partners II, L.P., a Delaware limited
partnership (the "PARTNERSHIP"), on August 19, 1997 and relates to the
tender offer made by BioRoyalties L.L.C., a Delaware limited liability
company (the "OFFEROR"), on behalf of Pharmaceuticals Royalty Investments,
L.L.C., a Delaware limited liability company, and Pharmaceuticals Royalty
Investments Ltd., a Bermuda company, disclosed in a Tender Offer Statement
on Schedule 14D-1 dated August 15, 1997 and filed with the Commission to
purchase any and all of the Partnership's issued and outstanding limited
partnership units (the "UNITS") at a purchase price of $3,650 per Unit,
net to the seller in cash, which price will be automatically reduced by
the aggregate amount of any cash or asset distributions made or declared
by the Partnership on or after June 30, 1997, upon the terms and subject
to the conditions set forth in the Offeror's Offer to Purchase dated
August 15, 1997 and the related Letter of Transmittal. The purpose of this
Amendment No. 1 is to amend Items 4, 8 and 9 of the Schedule 14D-9, as set
forth below. Terms defined in the Schedule 14D-9 are used in this
Amendment No. 1 with the same meanings as provided in the Schedule 14D-9.
ITEM 4. THE SOLICITATION OR RECOMMENDATION
The first paragraph of paragraph numbered 2. in Item 4(c) of the
Schedule 14D-9 is hereby deleted and replaced with the following:
2. The opinion of management of PWDC and the Manager that the Offer
is financially inadequate. In response to the Offer, management undertook
a valuation of each of the Partnership's assets. Such valuation was
prepared based on the following information, assumptions, methodologies
and factors: (i) the terms of the settlement of the Centocor Litigation,
which provides that Centocor will pay to CPIII investors (including the
Partnership) (A) in the aggregate $10.8 million, net of attorneys fees and
expenses as may be awarded by the Court, (B) an additional $5.0 million,
if and when cumulative world-wide sales of ReoPro exceed $600 million, (C)
possible additional payments totaling $2.2 million, depending upon
regulatory developments in Japan, and (D) a revision to the royalties
payable by Centocor to CPIII investors with respect to ReoPro through 2007
(as revised, Centocor would pay an aggregate of $175 million and 3.25% of
foreign end-sales revenues for 1997 and 1998 and an aggregate of 6.5% of
the first $250 million and 3.25% of foreign end-sales revenues for 1999
through 2007); (ii) based on the average of confidential sales information
for ReoPro furnished by Centocor to the Manager pursuant to a
confidentiality agreement and sales projections for ReoPro prepared by
Wall Street analysts not affiliated with the Partnership, and, to arrive
at a present value, the resulting value of sales estimates was discounted
by 18%, management estimated that a reasonable range of present values of
the financial terms of the settlement of the Centocor Litigation on a
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per Unit basis to be $4,496 to $5,535 (or approximately 80% of the present
value of all the Partnership's assets); and (iii) based on the arithmetic
average of sales projections prepared by Wall Street and other industry
analysts not affiliated with the Partnership with respect to other assets
of the Partnership whose value is dependent on third-party product sales
and on certain non-public information regarding product sales that was
furnished by sponsor companies to the Manager pursuant to confidentiality
agreements, which product sales projections and information were reduced
by up to 50% with respect to products for which regulatory approval has
not been obtained and, to arrive at a present value, the resulting value
was discounted by rates ranging from 15% to 35%, management estimated that
a reasonable range of present values for the remaining assets of the
Partnership (which includes certain securities and cash held by the
Partnership) on a per Units basis to be $1,059 to $1,430. Neither the
General Partner, the Manager, the Partnership nor any of their affiliates
assumes responsibility for the accuracy of any sales projections used in
preparing such valuation.
Based on the foregoing, management concluded that a reasonable range
of present values for all the Partnership's assets on a per Unit basis to
be $5,555 to $6,965, making the Offer a discounted amount of 35% to 48% of
such range of present values. Such range of present values represents
management's estimate of the present value of all of the Partnership's
assets, including the present value of royalties that are payable over
periods ranging up to 10 years. Management noted, however, that in
arriving at such range of present values, it was generally required to
rely on confidential and non-public information provided by sponsor
companies and to make the assumptions outlined above which included a
consideration of the timing of regulatory approvals, competitive products
and general company conditions, many of which assumptions are based on
factors beyond the control of the General Partner, the Partnership or any
of its affiliates. It is possible that the actual value of the
Partnership's assets may be significantly more or less than indicated, and
management, the General Partner and the Partnership are unable to provide
any assurance that the actual value that may be realized by the
Partnership or any Limited Partner would be as indicated by such range of
present values.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
Item 8 of the Schedule 14D-9 is hereby amended by adding the
following:
Other than any consent prohibited by the foregoing or by the
provision contained in the List Undertaking and described in clause (iv)
of the summary of the List Undertaking in Item 3(b)(ii), the General
Partner has no current intention of withholding its consent to the
transfer of any Units tendered to the Offeror for purchase pursuant to the
Offer. If the General Partner concludes, based upon the advice of counsel,
that any transfer of Units would increase the
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risk of adverse tax consequences to the Partnership or its partners, the
General Partner may, however, condition the transfer of such Units on an
appropriate opinion of counsel. The General Partner also reserves the
right to withhold its consent to the transfer of Units in the Offer if it
comes to the attention of the General Partner that any Limited Partner was
induced to tender its Units on the basis of any omission or misstatement
of material fact.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
Item 9 of the Schedule 14D-9 is hereby amended by adding the
following:
Exhibit 1.1. Form of cover letter to Limited Partners from the
Partnership dated September 25, 1997
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: September 29, 1997
PAINEWEBBER R&D PARTNERS II, L.P.
By: PaineWebber Technologies II, L.P.,
its general partner
By: PWDC Holding Company, its general
partner
By: /s/ Dhananjay M. Pai
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Name: Dhananjay M. Pai
Title: President
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Exhibit 1.1
[LETTER OF PAINEWEBBER]
PaineWebber Development Corporation
September 25, 1997 PAINEWEBBER
Dear Limited Partner:
As you may know, a fund called BioRoyalties LLC, an affiliate of Pharmaceutical
Partners L.P., has made a tender offer to acquire limited partnership interests
of PaineWebber R&D Partners II, L.P. ("R&D II") at an effective price of $3,600
per unit (after giving effect to the $50 distribution made on July 3, 1997,
which price will be further reduced by the value of any future distributions
which may be made until the tender offer terminates).
We have previously mailed to you our recommendation that the price offered by
BioRoyalties is financially inadequate and that you not tender your R&D II units
into their offer. This recommendation remains unchanged. Our reasons for our
recom mendation are set forth in the Schedule 14D-9 of R&D II which we mailed
you on or around August 20, 1997 and are elaborated on in the attached copy of
Amendment No. 1 to the Schedule 14D-9 which has been filed with the Securities
and Exchange Commission. This Amendment is being sent to you for information
purposes and requires no further action or response on your part.
Since BioRoyalties launched its tender offer, we have received numerous
questions and comments regarding both the offer itself and also the nature of
the telephone solicitation being conducted on BioRoyalties' behalf by The Herman
Group. Some limited partners have informed us that solicitors from The Herman
Group who have called upon them have been discourteous and disrespectful of
their privacy. There have also been complaints about their use of "scare
tactics" and highly questionable statements and allegations.
As general partner, PaineWebber Development Corporation is extremely mindful of
your privacy and we take your concerns very seriously. You and your family have
a right not to be harassed especially in your own home. In our agreement to
allow Pharmaceutical Partners to use the partner list of R&D II to make their
tender offer, we insisted -- and they agreed -- that "any solicitation of
limited partners ... will be conducted in a professional, reasonable manner
which will respect the privacy and rights of the limited partners." Following a
letter we wrote to them concerning your complaints, Pharmaceutical Partners has
advised us that they will not contact any limited partner who indicates that he
or she does not wish to be contacted.
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ACCORDINGLY, IF YOU DO NOT WISH TO RECEIVE CALLS FROM BIOROYALTIES OR THEIR
REPRE SENTATIVES IN CONNECTION WITH THEIR TENDER OFFER, PLEASE FILL IN THE
ATTACHED FORM AND RETURN IT TO US IN THE ENCLOSED PREPAID ENVELOPE OR VIA
FACSIMILE AT (212) 713- 4040. WE WILL RELAY YOUR DESIRE NOT TO BE CONTACTED TO
PHARMACEUTICAL PARTNERS, WHO WILL, WE HOPE, HONOR THEIR PROMISE AND CEASE TRYING
TO SOLICIT YOU.
As we have explained in previous letters, the General Partner has adopted a
policy relating to the use of partner lists (a copy of which is available upon
request). We are aware that some unitholders may desire liquidity and would be
willing to consider selling their R&D II units at the right price. The policy of
the General Partner is not to discourage offers, but rather to ensure that our
limited partners are given all the information and the time required to make a
careful and informed business decision.
In the case of the BioRoyalties offer for R&D II units, we continue to believe,
for the reasons set forth in the Schedule 14D-9 we have previously mailed to you
and further elaborated in the attached amendment to that document, that the
price offered is financially inadequate. If you are looking for liquidity, this
offer does present a liquidity opportunity. Because there is no efficient
trading market for the units, the prices available on the secondary market, if
at all, are substantially discounted from the net asset value underlying the
units and have historically been lower even than the price offered by
BioRoyalties. However, you should be aware that, in our view, the BioRoyalties
offer values your units at a substantial discount to their real value. We urge
you to review all the information we have provided to you concerning the offer.
If you have already tendered your units and now wish to change your mind, you
may do so and withdraw your units from the offer by following the procedures set
out in the BioRoyalties offer documents.
My staff and I are, as always, available to answer your questions at (800)
433-8901.
Sincerely,
Robin Stanley
PaineWebber Development Corporation
att.
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TO: PaineWebber Development Corporation
c/o Investor Services
PO Box 7090
Troy, Michigan 48007-9921
Ladies and Gentlemen:
Please inform Pharmaceutical Partners L.P. that I wish not to be contacted in
connection with their affiliate BioRoyalties LLC's tender offer for units of
PaineWebber R&D Partners II, L.P.
Name: _________________________
(Print)
Address:_________________________
_________________________________
_________________________________
Signature: ______________________
Date: ___________________________
THIS LETTER MAY BE FAXED TO PAINEWEBBER DEVELOPMENT CORPORATION AT (212)
713-4040. In case of transmission problems or questions please call
1-800-852-6570.
