Sears, sorely in need of cash, is selling most of its stake in its Canadian unit to raise as much as $380 million.
The sale to its own shareholders will give Sears Holdings Corp. some breathing room as it heads into the crucial holiday season.
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The company expects at least $168 million in proceeds in mid-to-late October, with the rest by early November.
Sears has said that it's exploring options for its limping Sears Canada operations.
The company, based in Hoffman Estates, Illinois, has faced mounting pressure from rivals in what has proved to be tough recovery from the recession.
The rights offering is for up to 40 million shares of Sears Canada Inc. Sears will still hold about 12 million shares of Sears Canada, valued at about $113 million.