RLPC-Gas Natural in 17 bln euro loan for Union Fenosa buy

LONDON, July 31 (Reuters) - Spanish utility Gas Natural (GAS.MC) is borrowing 17 billion euros in a syndicated loan provided by ten banks that were mandated to finance the acquisition of rival Union Fenosa UNF.MC on Thursday.

Gas Natural announced on Thursday that it has mandated Barclays, BNP Paribas, Caja Madrid, Citigroup, ING, La Caixa, Royal Bank of Scotland, Santander, Societe Generale and UBS to lead the loan backing its purchase.

"The banks are committed to providing the financing for the whole transaction which will be around 17 billion euros," a company spokesman told Reuters Loan Pricing Corp.

The 17 billion euro loan covers the full financing requirement, which totals 16.757 billion euros, and will include an aval -- a guarantee facility required by the Spanish stock exchange, two bankers said.

The loan is expected to include a large component of short-term debt which will allow participating banks to reduce their exposure and recycle scarce capital quickly.

Gas Natural also plans to make disposals of more than 3 billion euros, which will go towards repaying the loan.

The acquisition is also backed with strong equity contributions from Gas Natural's shareholders Spanish oil major Repsol and holding Criteria, which hold stakes of 24.2 percent and 30 percent.

The two companies will inject up to 1.6 billion euros and 1.9 billion respectively for the purchase, giving a combined equity contribution of up to 3.5 billion euros.

The equity contribution is expected to help Gas Natural retain a consolidated investment-grade rating of at least BBB and Baa2 by Standard & Poor's and Moody's post-acquisition.

For the latest story on Gas Natural's takeover of Union Fenosa click [ID:n1617641]

(Reporting by Zaida Espana; Editing by Erica Billingham)