MADRID, May 30 (Reuters) - Spanish oil major Repsol said on Thursday it was seeking board approval to buy back 3billion euros ($3.9 billion) of preference shares or convertthem into long-term bonds to help bring its debts under control.
When Argentina expropriated Repsol's majority stake in itsYPF subsidiary last year, the company was left with afunding gap that endangered its investment-grade credit rating,seen as vital for its access to affordable borrowing.
Credit rating agencies view the Repsol preference shares asa liability.
The company plans to pay cash for just under half of theshares and convert the rest into a long-term bond that will beless costly to the company than the preference stock.
For each preference share, which has a nominal value of1,000 euros, holders will receive 475 euros in cash and 500euros worth of a 10-year bond carrying a 3.5 percent coupon.
The preference shares, which trade on fixed-income marketAIAF, reacted positively to the plan, rising by around 4percent.
The terms offered by Repsol, which has more preferenceshares than any other Spanish company, are one of the bestrecently offered in Spain, where many small investors have madelarge losses from holding similar securities in nationalisedbanks such as Bankia.
Royal Dutch Shell bought LNG assets from Repsol inFebruary, more than halving the company's debt. Repsol got afurther boost when Singapore state fund Temasek bought itsentire treasury stock.
Repsol said in a statement its board would meet on Friday todiscuss its proposal for the preference shares. Repsol holds itannual shareholder meeting the same day.
