TORONTO -- Sears Holdings Corp. is selling most of its stake in its Canadian unit to raise as much as US$380 million and increase its cash holdings ahead of the crucial holiday shopping season.
The sale of about 40 million Sears Canada shares to its own shareholders -- including financier Edward Lampert and ESL Investments Inc., a private company that he controls -- will give the publicly traded Sears Holdings some breathing room.
The company expects at least US$168 million in proceeds in mid-to-late October, with the rest by early November. Lampert and ESL have told Sears they intend to exercise their option to acquire a proportional amount of the subscription rights.
The rights will be tradable and can be used to buy Sears Canada shares at C$10.60 each -- a discount to the Oct. 1 closing price of C$11.12.
Sears Canada -- a Toronto-listed public company that's controlled by Lampert through Sears Holdings, ESL and his personal holdings -- says it will co-operate with the plan.
The plan calls for the Canadian company to apply for a listing on Nasdaq, where the subscription rights will be traded.
Sears has said previously that it was exploring options for its limping Sears Canada operations, which have been downsized in recent years amid increased competition with the arrival of other U.S. retailers.
Its current president and chief executive, Douglas Campbell, said last week that he intends to resign and return to the United States by the end of the year for personal reasons.
Sears Holdings, based in Hoffman Estates, Illinois, has faced mounting pressure from rivals in what has proved to be tough recovery from the recession.
Sears Holdings will still hold about 12 million shares of Sears Canada, valued at about $113 million.
