WSF Headline Roundup - 5/16/08 - Icahn's YHOO proxy fight gets big fund backing; Deal to move £2bn of Boots' loans; Blackstone focusing on distressed; KKR focusing on infrastructure; TD Ameritrade Moglia no longer CEO; Rio Tinto ore boycott

• Paulson Hedge Fund to Back Icahn
• Deal to sell £2bn of Boots' debt
• Blackstone focuses on distressed property
• Blackstone Has $66.5 Million Loss as LBO Fees Drop
• KKR expands into infrastructure
• TD Ameritrade's Moglia to Cede CEO Role
• Rio Tinto Faces Iron-Ore Boycott

Paulson Hedge Fund to Back Icahn - Wall Street Journal

Paulson & Co., a New York-based hedge fund, bought 50 million shares of Yahoo Inc. during the first quarter and said it plans to support Carl Icahn's dissident slate of directors.

Paulson, which successfully bet against the subprime mortgage market last year, bought the Yahoo shares some time after Microsoft Corp. made its unsolicited bid for Yahoo earlier this year. Microsoft withdrew its bid May 3, and Carl Icahn has launched a proxy fight to try to replace Yahoo's board.

"We intend to support the Icahn slate but sincerely hope that Yahoo will negotiate an agreement with Microsoft thereby making a proxy fight unnecessary," Paulson said in a statement. Paulson also said that a Microsoft/Yahoo hook-up would offer stronger competition to Google Inc.....

Deal to sell £2bn of Boots' debt - Daily Telegraph

Bankers to KKR-owned Alliance Boots have reached an in-principle agreement to sell at least £2bn of the chemist chain's debt to a private equity consortium of Apollo, Blackstone and TPG.

Banking sources said a deal to sell some debt to KKR broke down yesterday because KKR wanted to borrow back too much money from the investment banks funding the acquisition. The investment banks will lend the other private equity buyers about 80pc of the purchase price of the debt, but KKR was not willing to put up that much of its own cash.

The deal will see at least four of Boots' eight bank syndicate - Deutsche Bank, Citigroup, Royal Bank of Scotland and Bank of America - offload the first tranche of Boots £9bn leveraged loans frozen by the credit crunch.

This is the first time since the credit markets seized in July that frozen debt from UK leveraged buyouts such as Boots and the AA-Saga merger EMI has been sold. It will bolster hopes liquidity is filtering through to shift the overhang, which initially saddled banks globally with $337bn of unsold debt.....

Blackstone focuses on distressed property - Financial Times

Blackstone, which made big profits last year by flipping commercial properties at the height of the market, is considering buying back into some of those assets at distressed prices as part of an effort to cash in on the credit crisis.

Blackstone’s emphasis on buying distressed assets highlights efforts by private equity firms to reinvent themselves now that they are losing access to the loans they need to finance large leveraged buy-outs.
The firms are aiming to generate big returns by purchasing distressed debt and other assets at deep discounts, financing those deals with more debt if possible, and then hoping that prices recover.

Blackstone Has $66.5 Million Loss as LBO Fees Drop - Bloomberg

Blackstone Group LP, the buyout firm that went public at the peak of the takeover boom last year, posted an unexpected loss of $66.5 million as fees fell in every business, including deal-making, hedge funds and merger advice.

Revenue tumbled 94 percent to $68.5 million in the first quarter as Blackstone's share of profits from its investment funds turned negative, the New York-based company said today in a statement. The firm, run by Stephen Schwarzman, announced one leveraged buyout, valued at $1.2 billion, in the period, compared with $42 billion in deals a year earlier.

Blackstone was hurt by the evaporation of credit in the second half of last year that brought the LBO market to standstill, and by turbulent stock and bond markets that cut hedge-fund profits. Revenue from real estate funds plunged to $47.9 million from $766.8 million a year earlier, when property values were higher and results were pumped up by its purchase of Equity Office Properties Trust for $39 billion.....

KKR expands into infrastructure - Financial Times

Kohlberg Kravis Roberts will on Friday unveil plans to diversify into infrastructure, hiring a top Lazard executive to lead an expected $10bn fundraising, as the US private equity group reacts to recent credit market turmoil.

The shift into infrastructure is a tacit admission by KKR that it is too focused on “mega buy-outs” of large companies, which have become almost impossible as the debt needed to finance them has dried up in the credit squeeze....

TD Ameritrade's Moglia to Cede CEO Role - Reuters

TD Ameritrade is making changes to its executive management lineup.

The online brokerage's veteran CEO Joe Moglia is ceding his daily managerial responsibilities in order to become chairman. TD Ameritrade President and COO Fred Tomczyk will succeed Moglia as chief executive. The changes are effective as of October 1, the start of TD Ameritrade's fiscal 2009 year, the company said.

Moglia, 59, has been TD Ameritrade's CEO since 2001. He follows in the footsteps of chairman, former CEO and major shareholder, Joe Ricketts. Ricketts said in February at the company's annual meeting that he planned to retire when his contract expires at the end of September, a spokeswoman said.

Under Moglia's leadership, TD Ameritrade has been expanding past its online trading roots to include financial advisory services targeted to "mass affluent" investors -- those typically with $100,000 to $1 million of investable assets.....

Rio Tinto Faces Iron-Ore Boycott - Wall Street Journal

Chinese steelmakers are considering a boycott of Rio Tinto, accusing the miner of limiting its lower-priced contract-supplied iron ore in order to force buyers to pay much higher spot market prices.

The threat -- an appeal by the China Iron & Steel Association to Chinese steel mills and iron-ore traders -- comes as the mining giant is pressing for higher contracted prices with China's steelmakers. In response, Rio Tinto said it is honoring all its contract and the call for a boycott should be seen in the context of the ongoing negotiations.

The move could provide a window of opportunity for smaller competitors, including an Australian upstart, which Thursday shipped its first load of iron ore to China in hopes of breaking the iron-ore grip held by the world's top three mining companies -- Rio Tinto, BHP Billiton and Brazil's Companhia Vale Do Rio Doce.....