Gas Natural buys first 9.9 pct of Fenosa - reports

MADRID, Aug 2 (Reuters) - Spanish utility Gas Natural (GAS.MC) has bought 9.9 percent of Union Fenosa UNF.MC, the first stage in its planned 16.8 billion euro ($26.16 billion) takeover of the electricity firm, newspaper reports said on Saturday.

Gas Natural had pledged to buy the initial stake within five working days of announcing its deal on Wednesday to eventually buy 45.3 percent stake in Fenosa held by debt-laden building company ACS (ACS.MC).

The company has said it hopes to obtain by February the regulatory approval needed to acquire the remainder of ACS's position in Fenosa, Spain's third largest generator.

After that, securities regulations will require Barcelona-based Gas Natural to launch a cash bid for all other outstanding shares in Fenosa, which it expects to complete by April.

If minority shareholders sell at the 18.33 euros per share price agreed with ACS, the total buyout will cost gas natural 16.8 billion euros. Fenosa shares closed at 17.06 euros on Friday.

Ratings agency Standard and Poor's said on Friday it may cut its credit ratings of Gas Natural.

"It (the buyout) would result in a material weakening of Gas Natural's financial profile due to the size of the bid and the consolidation of Union Fenosa's approximate 6.9 billion euros of adjusted debt (at end-2007)," Standard and Poor's said.

Gas Natural has said it plans to fund the buyout with a capital expansion of 3.5 billion euros and asset sales of another 3.0 billion. (Reporting by Martin Roberts)