Kay Corp. yesterday announced plans to spin off its most profitable operation, Kay Jewelers Inc., retaining 80 percent of the jewelry company's stock and offering the remaining 20 percent to the public.

In a document filed with the Securities and Exchange Commission yesterday, Kay said it would retain control of the nation's third-largest jewelry chain. The remaining one million shares will be offered to the public sometime late next month, pending SEC approval. The company estimates that the selling price would be between $10.50 and $12 a share.

Kay Corp., which also owns the international commodities trading business Balfour, Maclaine International Ltd., has been considering spinning off Kay Jewelers for more than a year because it believed that the more speculative and risky commodities business has deterred the public from investing in Kay Corp.

Spinning off Kay Jewelers will "create an independent stand-alone specialty retailing company capable of being recognized in the marketplace and measured comparatively against other companies with similar operations," the company said.

Last year, jewelry operations -- made up of Kay Jewelers; Marcus & Co., which operates jewelry departments for department stores; and Black Starr & Frost -- had an operating profit of $21.9 million on revenue of $206.7 million.

The international trading business, on the other hand, had an operating profit of $11.9 million on revenue of $610 million.

Under the spin-off, Michael R. Lavington will remain as president of Kay Jewelers Inc.