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Only way to grant someone premium is by either gifting Orange box OR this
You can buy the gift-able upgrade here:
http://store.steampowered.com/buyitem/440/5082
Tip: it's much cheaper if your buddy was able to sell trading cards. 4x TF2 cards could be enough to buy one item if he was able to sell those on the market.
My bet is that your buddy never spend a dime on steam, therefore is unable to access the market to sell trading cards, and only owns games gifted or free. If that's the case, you're only able to gift either of the items mentioned above.
Edit:
Should've mentioned this, it's also possible to obtain the 'upgrade' via trading.