MADRID (Reuters) - Spain's Telefonica (TEF.MC) said on Wednesday it would slash 776 million euros ($1 billion) from its over 50 billion euros of debt after receiving 97 percent uptake in a swap of preference shares for stocks and bonds.
The cash raised from the swap will take the Spanish telecoms group closer to its year-end leverage target of 2.35 x operating income.
The company, which must slash debt to hold onto its investment grade rating, has said it will end the year with 50 billion euros of debt, compared to 56 billion euros at end-September.
Telefonica said last month it would offer to buy back some 2 billion euros of preference shares, a hybrid debt instrument, using 40 percent treasury shares and 60 percent 2022 bonds with a 4.185 percent coupon for the swap.
Telefonica fixed the price of the shares included in the swap deal at 10.2 euros, based on the stock average between November 19 and November 23, when the acceptance period closed, the firm said in a notice to Spain's stock market regulator.
The company will issue 1.16 billion euros worth of 10-year bonds in the swap, which will take place on Thursday.
Telefonica has sold a number of assets this year as part of its debt-reduction drive, including call centre business Atento, and successfully listed its German unit O2De.DE in October.
Telefonica is now expected to list its Latin American business to keep raising cash.
(Reporting by Clare Kane; Editing by Mike Nesbit)