China Aerospace International Holdings (Casil) is hoping to raise $180 million through the spin-off off its telecom business on the Hong Kong stock market, sources say. They say Casil Telecommunication Holdings, whose float was approved by the stock exchange late last month, plans to issue 150 million new shares at $1.20 each in the separate listing. Of the proposed issue, 75 per cent will be offered to the public, 5 per cent to employees and the remaining 20 per cent to Casil's existing shareholders on a guaranteed basis. Casil shareholders will be able to subscribe for one new share in the spin-off for every 20 shares held, according to one source. Casil Telecom is scheduled to start trading early next month. Casil Telecom will hold all the telecoms and related businesses within the group while the parent will focus on other hi-tech businesses, the source said. The parent signed a US$150 million guaranteed floating rate note with banks yesterday. The three-year notes carry a floating rate 1.3 per cent over the London interbank offered rate. Of the total proceeds, US$80 million will be used as a pre-payment for a short term loan, chairman Wang Meiyue said. 'The rest of it will be used to fund Casil's expansion and for new projects,' he said. Mr Wang said Casil's gearing was at a reasonable level and would fall further after the new fund raising. Casil is seeking to increase its exposure to hi-tech industries, such as the assembly of personal computers, and development of software with its ultimate parent in Beijing - China Aerospace Industry Corp - and other parties. He said the company was discussing setting up joint ventures with mainland and overseas parties. The electronics counter had also started to access the biochemistry sector by setting up a drug factory.