BASIS POINT-Norske Skog selling Korean unit

HONG KONG, June 23 (Reuters Basis Point) - Norwegian paper firm Norske Skogindustrier ASA (NSG.OL) is selling its South Korean unit to raise funds to help clear roughly US$1 billion of debt, sources told Reuters' Basis Point.

Five bids have already been submitted: solo proposals from Affinity Equity Partners, Hana Private Equity Fund and MBK Partners LP; and team bids from Indonesia's Korindo Group with Mirae Asset Securities, and Morgan Stanley (MS.N) Private Equity with Shinhan Private Equity Fund.

Hana Bank is backing three of the five bids: Affinity, Hana PEF and MBK. Shinhan Bank is supporting the group bid from its affiliated PEF and Morgan Stanley.

The Korean unit, Norske Skog Korea Co Ltd, has an EBITDA of around US$100 million.

Bankers close to the deal said the bidding price would be more than US$500 million and could go up to US$800 million.

UBS AG (UBSN.VX) (UBS.N) is advising Norske Skog on the sale.

The Korean subsidiary, one of the strongest units in the Norske Skog group, accounts for roughly 80 percent of Korea's paper production market share. It has a paper mill in Cheongwon and another in Jeonju.

Standard & Poor's downgraded the group to BB from BB+ in January, while Moody's Investors Service cut its rating to B1 from Ba2 in April amid reports that the company was struggling with weak earnings. (Jacqueline Poh; editing by Anne Marie Roantree)