HOFFMAN ESTATES, IL—Sears Holdings Corp. said Thursday that its board has approved the sale of up to 40 million shares of Sears Canada Inc., a move that could generate as much as $380 million. With an eye toward shoring up its cash holdings ahead of the holiday selling season, the financially beleaguered retailer is reducing its share of its Canadian operation to a minority stake of about 12 million shares. It expects at least $168 million in US proceeds by mid- to late October, with the balance coming in the following month.

Much of the early proceeds from the sale will come from Eddie Lampert and ESL Investments, which he controls. SHLD's chairman and CEO, Lampert owns 48.5% of its stock. SHLD borrowed $400 million last month from ESL affiliates. The short-term loan is secured by first-priority liens on 25 SHLD-owned properties.

Separately, Sears Canada said Thursday that it would cooperate with the parent company's rights offering and that it had agreed to amend its licensing deal with SHLD. The Toronto-based company said it would continue to use the Sears name and certain other brand names associated with its product lines as long as SHLD maintains a 10% stake, down from the current trigger of 25%.

Proceeds from the sale of Sears Canada shares will provide SHLD with additional liquidity as it enters the make-or-break holiday season, says CFO Rob Schriesheim. When the Sears Canada rights offering is taken together with the $500 million dividend Holdings received in connection with the Lands' End spinoff, the $165 million in proceeds from certain real estate transactions and the $400 million short-term loan the company recently completed, SHLD will have generated up to $1.445 billion in liquidity in fiscal 2014. he says.

Schriesheim says these actions demonstrate SHLD's “financial flexibility” while giving it the means “to fund its transformation and meet all of its obligations.” Over the next six to 12 months, he adds, SHLD “intends to evaluate its capital structure with a goal of achieving more long-term financial flexibility, and may take other actions as appropriate.”