Russia's largest producer of confectionaries, the Red October chocolate factory, is to sell 55 percent of its stock, for the first time placing a major share in one of the icons of Soviet industry on the open market for cash, a company official said Thursday.


The share issue, which has been valued at $30 million, has been organized under the guidance of the British Know-How Fund and other Western advisors, although no date has yet been set.


The auction would make Red October the first major company in Russia to offer a significant chunk of its shares for cash and is designed to set an example for other companies, said Richard Oliver, an assistant director with the Samuel Montagu investment bank, an advisor on the project.


"This sale is to set some standard in how to operate cash sales," he said.


Red October was set up 127 years ago as the German-owned Einem factory, which won chocolate producers' competitions across Europe, festooned Moscow with bright advertisements and attained the title of Purveyor to the Palace Court.


Since the October revolution of 1917, the red brick factory on the Moscow river has borne its present name and has acted as the primary purveyor of chocolates to the former Soviet Union.


With its historical glamor, profitability and location in the capital, Red October is one of the most attractive investment opportunities in Russia, said Michael Harman, senior consultant with the Policy Economics Group at the accountancy firm of KPMG Peat Marwick.


"It is the first time a profitable Russian company is selecting a Western partner it would be happy to work with," he said.


Red October made a net profit of $20 million last year and $8 million in the first half of 1994, said Tatyana Nikulshina, a manager with the Grant brokerage company that would conduct the auction. Its charter capital amounts to 10 billion rubles.


The Russian government trumpeted the advent of cash sales this summer after the voucher period of privatization came to an end, promising that the country's most attractive firms would put up their stocks at auctions.


However, the country's major companies have so far been presenting only tiny fractions of their stock at cash auctions, virtually precluding any significant foreign investment.


Red October would offer 5.5 million new shares to a predetermined mix of strategic and individual investors, Nikulshina said.


The factory would offer 2 million of the shares -- about 20 percent of the company -- to a single investor at an investment tender, the date for which is still being agreed upon, Nikulshina said. However, as of Nov. 28 potential investors would have a chance to get acquainted with the documents for the tender.


The remainder of the shares would go on the block at a public auction for 20,000 rubles ($6.4) apiece, Nikulshina said.


These shares would be divided into three parts: for foreign companies, for Russian individuals and for Russian corporate bodies, Nikulshina said.


The exact amount of shares for each category of investors is still under discussion. "We are trying to avoid getting all shares into one hands," Nikulshina said. "All will have equal chances to buy a piece of Red October."


At present, Red October shares are split among 10,000 shareholders, with the biggest package of 30 percent belonging to the workers' collective.


The factory plans to use the $30 million it hopes to raise in the new share issue to buy new equipment to produce high-quality chocolate, Nikulshina said.


In addition to the main share issue, a 51 percent share in Red October's subsidiary in Kolomna south of Moscow will also be up for sale, Nikulshina said. Conditions of the offer stipulate that the investor would equip the factory to make any kind of produce but chocolate, to avoid competition with Red October.


The Red October cash sale will represent the first fruit of the British Know-How Fund's ?4 million ($6.4 million) program to develop Russia's fledgling securities market, said Oliver of Samuel Montagu.


"The project is to set some standard on how to work with legal documents, to promote advertizing of persuasive character without false promises and to get some liquidity into the Russian securities market," Oliver said.