Sears Holdings (SHLD) announced Thursday that it was undertaking a rights offering to sell 40 million of its shares in Sears Canada (SEARF), its 51%-owned Canadian subsidiary. SHLD intends to use the $380 million in expected proceeds to boost its liquidity heading into the holiday selling season.

Really, though, it’s just one more act of desperation in Sears’ death by a thousand cuts.

Investors are addicted to the drama being played out by Edward Lampert, and if I had a dollar for every time the word “liquidity” is used in a story about SHLD and Sears stock, I’d be a freaking millionaire — maybe even a billionaire. But there’s a reason: Sears hangs in the balance.

So, let’s get into the nitty gritty of why this is happening.

SHLD Needs Money

In recent years, Sears has used Sears Canada as its own personal piggy bank. SHLD pocketed $295 million in dividends from its Canadian subsidiary over the past two fiscal years, and a whopping $639 million in 2010 for a total haul of slightly less than a billion dollars over a four-year period. It’s money that has kept SHLD liquid (there’s that word again) and kept Sears stock from cratering.

According to CFO Ron Schrieshiem, Sears has managed to boost its liquidity in 2014 by $1.4 billion, providing it with “the means to fund its transformation and meet all of its obligations. As previously announced, over the next six to 12 months, Holdings intends to evaluate its capital structure with a goal of achieving more long-term financial flexibility, and may take other actions as appropriate.”

It’s short-term relief for Sears stock.

Essentially, the CFO is saying Sears has bought itself another crappy holiday season to really impress investors.

The fact that Fitch believes Sears will run out of money in 2016 if it doesn’t find $4 billion in capital is immaterial; so too is the fact SHLD lost almost $1 billion in the first two quarters of the year.

It seems holders of Sears stock (including Lampert) want but one thing, and that’s to stay in the game long enough to cash out its massive real estate holdings — the pot of gold at the end of the rainbow.

Only it’s not.

Steven Dennis is a Dallas-based retail consultant who worked at Sears in various senior positions between 1991 and 2003. In May, Dennis wrote a blog post entitled “5 Reasons Why Sears Should Liquidate, ASAP.” He makes a very intelligent argument for putting SHLD out of its misery today, if not sooner. Included in the discussion is his assertion that Sears’ real estate holdings aren’t going to get more valuable over time, so any pot of gold will only diminish as the days and weeks fly by.

Throwing Sears Canada overboard at this point makes sense because there’s very little downtown real estate left to sell, and four consecutive years of operating losses means it will want to keep its cash rather than sending it on to SHLD.

Sears stock has nothing more to gain from the company’s grip on Sears Canada, and although I absolutely deplore Edward Lampert’s tactics regarding SHLD, in this situation he really has no choice.

The jig is up.

What’s the Downside for Sears Stock?

Sears stock was up some 5% on average volume late Friday. Investors clearly view the sale as a necessary step in keeping the lights on.

However, short-term gain may ultimately result in long-term pain.

Sears continues to do everything but hire competent merchants who can drive sales (Lampert couldn’t be a stock boy at one of his stores). If this Christmas is a dud — which most expect it will be — the liquidation could begin in earnest in 2015.

Of course, we’ve heard this refrain the last few Christmases so who really knows.

However, we do know that in August Schrieshiem valued Sears’ stake in Sears Canada at $745 million; the rights offering pegs its 51% stake at $494 million, $251 million less than just six weeks earlier. On a per share basis it will see $2.36 less than anticipated.

Owners of Sears stock shouldn’t be too happy about this valuation collapse … but then again, if it keeps the lights on, the pot of gold is still in play.

Bottom Line

Sure, Sears has bought itself some time. But that’s about it.

Compare SHLD to JCPenney (JCP), which has pulled out all the stops, including developing a coherent business plan to ensure its survival. CEO Mike Ullman has done more in 17 months back on the job trying to fix the department store than Lampert has done in an entire decade. JCP’s survival isn’t a sure thing, but it’s a heck of a lot likelier than SHLD.

The bottom line on Sears stock: You’re a fool to hang on for the pot of gold. It isn’t coming.

As of this writing, Will Ashworth did not hold a position in any of the aforementioned securities.