But the unit is turning out to be worth much less than Sears thought just six weeks ago.

The retailer, which also operates the Kmart discount chain, said it expects to raise $380 million in proceeds by early November from the sale of 40 million Sears Canada shares through a rights offering. That would leave Sears with 12 million Sears Canada shares, or about 12% of the company, which the parent estimated are worth $113 million.

While Sears had previously said it planned to sell its stake in the Canadian division, on Aug. 19 the company’s finance chief told investors he thought the parent company’s stake was worth $765 million.

The Canada rights offering is part of an effort by Sears to raise $1 billion this fiscal year so it can fund what the company calls its “transformation,” from a brick-and-mortar retailer to one focused much more on digital and e-commerce, with a membership program called Shop Your Way driving sales. But things are not working out that way, at least not quickly enough: Sears burned through $747 million in cash in the first half of the fiscal year, leaving it with only $829 million on hand at the peak buying period ahead of the holiday season.

Since retailers typically make 30% of their sales and 40% of their profit during the Christmas season, they can ill afford snafus with vendors concerned with any real or perceived lack of liquidity, making having tons of cash on hand essential at this time of year.

“Proceeds from the rights offering will provide additional liquidity to Holdings as it enters into the holiday period,” Rob Schriesheim, Sears Holdings’ Chief Financial Officer said in a statement.

Sears CEO Eddie Lampert’s investment vehicle ESL Investments, the company’s top shareholder with 48.5% of shares, last month said it would lend the company $400 million on a short-term basis. That — along with the spinoff this spring of Sears’ Lands’ End activewear brand that yielded $500 million and some real estate transactions — means the company will have generated $1.445 billion in new liquidity in fiscal 2014, assuming the rights offering goes off without a hitch. Sears is also looking into selling its Sears Auto Center car shop business. Sears said ESL Partners L.P. said it intends to fully exercise its Canada offering rights.

Last month, Fitch Ratings downgraded its long-term debt, citing the “magnitude of Sears’ decline in profitability” and questions about whether the company can turn things around. Sears’ shares have fallen by half since April. Sears plans to close 130 stores this year, bringing closures since 2010 to more than 400. That will leave it with 1,900 Sears and Kmart stores, still making it one of the larger U.S. retailers.

The Canada offering follows a period of turmoil north of the border: last week, Sears Canada’s CEO quit and the retailer’s sales have been in sharp decline and under more pressure from the arrival of Target (TGT) in the market last year. In the first half of the current fiscal year, Sears Canada’s same-store sales (a measure that strips out the effect of store closings and new store openings) fell 7.1%, while the retailer lost $96.5 million, compared to a profit of $121.6 million the first half of last year. It has been cutting jobs and sold off some of its best real estate assets, such as store leases at Toronto Eaton Centre and Vancouver’s Pacific Centre, making the chain less attractive to would-be buyers.

Sears Canada said it would continue to use the Sears name and certain other brand names as long as Sears Holdings maintains a 10% stake, down from a previous trigger of 25%.