(Bloomberg) -- Mitsubishi UFJ Financial Group Inc. plans to sell about 86 billion yen ($608 million) worth of Marelli Holdings Co. loans to Deutsche Bank AG, people with knowledge of the matter said. The auto-parts supplier completed a court-led rehabilitation and is operating normally.

The Japanese bank has already written off most of the amount, and is seeking to recover income by selling the debt, said the people, who asked not to be identified because the details aren’t public. The bank is seeking to complete the transfer in October, they added. MUFG shares climbed as much as 1.1% Wednesday morning in Tokyo.

Deutsche Bank’s bet comes after another distressed debt deal gave the lender a huge windfall profit, estimated to have been as much as $1 billion, last year. That turned the unit overseeing the transaction -- the credit trading business -- into a key performance driver that helped the German lender achieve the highest profit in a decade. The bank has since said the unit is unlikely to repeat that result this year. 

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It’s not clear how much Deutsche Bank will pay to acquire the Marelli debt held by MUFG, although it will be at a significant discount, the people said. The deal won’t impact Marelli because it is well advanced in the restructuring process. 

Spokespeople for MUFG and Deutsche Bank in Tokyo declined to comment. 

Sumitomo Mitsui Financial Group Inc. is considering also selling its Marelli loan portfolio of about 173 billion yen, some of the people said. A spokesman for the bank declined to comment.

The Tokyo District Court approved Marelli’s restructuring plan in early August. Marelli, owned by KKR & Co., had initially sought an Alternative Dispute Resolution process in Japan that lets a company under financial strain continue to operate while renegotiating its debt with creditors. The court-supervised procedure was effectively an extension of the ADR process that simplifies the steps needed to reach resolution.

KKR was selected as a sponsor for Marelli, a key supplier for Nissan Motor Co. and Stellantis NV, which would essentially keep the private equity firm as a key stakeholder.

As part of the turnaround plan, Marelli saw the cancellation of about 450 billion yen in debt. As of March, Marelli’s total debt stood at around 600 billion yen, from 1.13 trillion yen before the rehabilitation process. 

MUFG’s loans to Marelli were reduced to about 86 billion yen due to partial debt forgiveness, from about 147.6 billion yen. 

Marelli was created in 2019 when KKR merged its Calsonic Kansei and Magneti Marelli units. Revenue plummeted last year as the coronavirus pandemic took hold, disrupting supply chains, chip availability and automobile manufacturing across the globe. The company employs about 54,000 people and operates about 170 facilities around the world to manufacture lighting systems, air conditioning, electric motors, suspensions and other components for carmakers.

(Updates with MUFG share move in second paragraph)

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