Sears Holdings plans to raise up to US$380m by selling off the majority of its stake in Sears Canada to generate additional liquidity ahead of the all-important holiday season.

The department store retailer intends to sell up to 40m shares in Sears Canada through a rights offering. Of the $380m expected to be generated from the sale, at least $168m will be received by mid-to-late October.

The company said the rights offering satisfies the dual goals of receiving significant cash value from its 51% stake in Sears Canada and concurrently reduces its investment in Sears Canada, while retaining around 12m shares valued at about $113m.

Sears Holdings said the proceeds will support its continued transformation as well as operational activities during the upcoming holiday and post-holiday season.

The move comes less than five months after it revealed it was exploring strategic alternatives for its Canadian business, including a possible sale.

In August, Sears Holdings described its wider loss in the second quarter as "unacceptable", adding that there would be more work to get the results it wants.

The retailer's net loss amounted to $581m during the 13 weeks to 2 August, from $127m last year, while revenues declined 10.1% to $8bn.