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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
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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