UPDATE 1-Spain's ONO names Castellano new chairman

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MADRID, Nov 6 (Reuters) - Spanish telecom company ONO's board said on Thursday that it has appointed Jose Maria Castellano as its new chairman, replacing Eugenio Galdon, founder and one of ONO's core shareholers.

"With the naming of Jose Maria Castellano, the company will carry through an important transition in its strategy to achieve an excellent management focused on marketing and sales," the operator said in a statement.

The top management shuffle comes after the cable telecom operator announced plans to cut a third of its workforce as the economic slowdown in Spain deepens.

In its statement, Ono said the decision to appoint Castellano was taken at a board meeting and backed by the vast majority of the shareholders represented. Galdon will continue as a member of the board, it said.

The board had backed the job cuts announced, said Ono.

"The board confirmed that there is no intention whatsoever to sell the company," it added.

A source close to the matter said on Wednesday that a majority of foreign investors controlling more than 68 percent of the firm were unhappy with ONO's strategy under Galdon and were pressing for his replacement.

The foreign investors include private equity shareholders CCMP, Providence, Thomas H Lee and Quadrangle, which invested in ONO in 2005 and control around 53 percent of its stock.

Spain's largest bank Santander (SAN.MC) owns 4.4 percent, while Galdon owns 21.4 percent through the investment vehicle Multitel.

ONO is facing a sharp economic slowdown in Spain and tightening credit conditions. It has debt of five times EBITDA (earnings before interest, tax, depreciation and amortisation) from its purchase of rival cable operator Auna in 2006.

Castellano was Chief Executive Officer at Inditex (ITX.MC) until 2005 and was a key figure in the process of converting the Galician clothing retailer into a global player. (Reporting by Sarah Morris, editing by Judy MacInnes)