HOFFMAN ESTATES, Ill. (AP) — Sears, sorely in need of cash, Sears is selling most of its stake in its Canadian unit to raise as much as $380 million.

The sale of the majority of its 51 percent stake in Sears Canada Inc. to its own shareholders will give the retailer some breathing room as it heads into the crucial holiday season.

The company board approved a rights offering of up to 40 million shares of Sears Canada Inc.

Chairman and CEO Edward Lampert plans to fully exercise his subscription rights. ESL Investments Inc., of which Lampert is also chairman and CEO, will do the same.

Sears will still hold about 12 million shares of Sears Canada, valued at about $113 million.

The retailer, based in Hoffman Estates, Illinois, expects at least $168 million in proceeds from the rights offering in mid-to-late October, with the rest by early November.

Sears has been exploring options for its limping Sears Canada operations. Sears Holdings Corp., which runs Kmart and its namesake stores, has faced mounting pressure from rivals like Wal-Mart Stores Inc., in what has proved to be a slow recovery from the recession.

It also faces the continuing shift by consumers to online purchases from companies like Amazon.com.

Lampert, a billionaire hedge fund investor, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out from under bankruptcy protection.

The proceeds from the rights offering, in combination with a $500 million dividend tied to the spinoff of Lands' End, $165 million in proceeds from some real estate transactions and a $400 million short-term loan, will provide Sears Holdings with up to $1.45 billion in liquidity in fiscal 2014, according to Chief Financial Officer Rob Schriesheim. He said that the recent cash infusions will give Sears the financial flexibility to continue working on a turnaround.

Sears will continue to evaluate its capital structure over the next six to 12 months and may take other actions, Schriesheim said.

Once the rights offering is complete, Sears it will continue to work in support of Sears Canada.

Company shares are trading near three-year lows.