Struggling Sears Holdings Corp (SHLD.O) said it would raise up to $380 million by selling most of its stake in Sears Canada Inc (SCC.TO) through a rights issue, generating liquidity ahead of the crucial holiday shopping season.

Sears Holdings, which holds a 51 percent stake in its beleaguered Canadian unit, will sell 40 million shares of Sears Canada, leaving it with a stake of about 12 percent.

Sears Holdings put its stake in Sears Canada on the block in May as a part of the Illinois-based company's efforts to turn around its business after years of declining sales.

Shareholders of Sears Holdings will have the right to buy one share of Sears Canada for each share held, at a price of C$10.60 per share.

Sears Canada's shares closed at C$11.12 on the Toronto Stock Exchange on Wednesday.

The rights will be issued to Sears Holdings shareholders on record as of Oct. 20. Sears Canada will also apply for a Nasdaq listing.

Sears Holdings said Chief Executive Edward Lampert and his investment firm would exercise their rights, raising at least $168 million by mid to late October.

Lampert, his investment firm ESL Partners LP and affiliates own about 48.5 percent of Sears Holdings. ESL Partners provided a loan of $400 million to Sears Holdings in September.

Sears Canada's market share has been eroding for years. The Canadian chain reported in August its ninth loss in 14 quarters.

The company said last week Chief Executive Douglas Campbell would resign by the end of 2014 after just a year at the helm.

Sears Holdings shares closed at $25.18 on the Nasdaq on Wednesday. Up to Wednesday's close, the stock had fallen about 37 percent this year.