Highland Capital wants quick sale of PDL BioPharma, lacks confidence in company's current adviser

By Lisa Kerner

Charlotte, N.C., Dec. 12 - Highland Capital Management, LP said it continues to believe that "an expeditious sale of PDL BioPharma, Inc. as a whole or the monetization of its key assets will generate significant value for shareholders."

The investor made the statement in a Dec. 10 letter to the board of directors that was included in a schedule 13D filing with the Securities and Exchange Commission.

In addition, Highland urged the board to retain additional expertise in evaluating PDL BioPharma's royalty stream, likening its complexity to that of a bond.

"We do not believe the adviser selected by the board of directors is so qualified. When pressed on a recent conference call, Merrill Lynch could not name a single successful pharmaceutical royalty securitization transaction it had consummated," the letter stated.

Highland, with a 7% stake in PDL BioPharma, said it has been left out of the process despite its status as an equity owner and "participant in the pharmaceutical royalty securitization market."

The investor also cautioned the board that its current adviser "may be rushing to achieve a transaction that we would view as suboptimal."

Highland recommends PDL BioPharma conduct a royalty auction in early 2008 with a pre-arranged financing package available for any potential buyer.

On Oct. 30, Highland suggested PDL BioPharma's board of directors sell the Wilmington, N.C., pharmaceutical company and also called for the immediate resignations of Dr. Patrick Gage as chairman and Mark McDade as chief executive officer.

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