UPDATE 1-S. Korea's KDIC plans $235 mln KEPCO stake sale-source

* KDIC offers KEPCO shares at discount of zero to 3.9 pct tomkt price

* Deal could grow to almost $800 mln if KDIC sells entirestake

(Adds details of the deal, KDIC stake sale plans, background)

By Elzio Barreto

HONG KONG, Oct 9 (Reuters) - State-run Korea DepositInsurance Corp (KDIC) launched on Tuesday an up to $235 millionshares selldown in Korea Electric Power Corp (KEPCO), a source with direct knowledge of the plan said.

KDIC , through its Korea Resolution & CollectionCorp. unit, is offering 9.67 million KEPCO shares in a range of25,900-26,950 Korean won each, added the source, who was notauthorized to speak publicly on the matter and thus did not wantto be identified.

The deal could grow to almost $800 million, Thomson Reuterspublication IFR reported, if KDIC sells its entire 5 percentstake in the utility.

KDIC had been considering selling it for a while to recoupfunds that went into normalizing banks teetering from the Asianfinancial crisis, a KDIC official told Reuters on Tuesday. Thestate-run company got the stake when Newbridge Capital acquiredin 1999 what is now Standard Chartered Korea.

In late September, a government committee overseeing therecouping of public funds approved advising banks' request tosell the KDIC stake piecemeal - by chunks of 1.5 percent ormore.

Advisers previously only had the mandate to sell the entirestake or nothing, and the market was seen less likely to digestthe entire stake at once, a source with direct knowledge of thecommittee proceedings previously told Reuters.

Citigroup , Deutsche Bank , ShinhanInvestment Corp and Woori Investment & Securities were hired asjoint bookrunners on the deal.

(Additional reporting by Joyce Lee in SEOUL and Daniel Stantonin Singapore; Editing by Muralikumar Anantharaman)


Messaging: elzio.barreto.thomsonreuters.com@reuters.net))