China's Li Ning to raise $296m in share sale

PHOTO: China's Li Ning to raise $296m in share sale

HONG KONG - Leading Chinese sportswear firm Li Ning Company said Friday it plans to raise up to HK$1.87 billion (US$241 million, S$296 million) through a share sale to revitalise its brand and stimulate business development.

The Hong Kong-listed company plans to raise HK$1.85 billion to HK$1.87 billion via an open offer of convertible securities to provide funding to optimise its capital structure, a group statement said.

Each share will be priced at HK$3.5, a 42.64 per cent discount to the group's Thursday closing price of HK$6.21, and will be offered to "qualifying shareholders for every two existing shares", it said.

"We are at a critical point in executing our plans and transforming our business," the group's executive chairman Li Ning, a former Olympic gymnast, said in the statement.

"The additional capital to be raised...will ensure a stable platform while we work to restore the group to sustainable growth and profitability in the long-term and step into a new phase of our development," Li said.

Shares in Li Ning fell 14.7 per cent, closing at HK$5.3 in the Hong Kong stock exchange on Friday. The benchmark Hang Seng Index fell 0.08 per cent.

The Beijing-based company, which sells sports products including footwear, clothing and equipment, said the expansion of China's sports goods industry had negatively affected the profits and productivity of its stores.

It added that problems with the group's sales channels in the past two years had started to impact the company's financial position, with increasing debt becoming a factor.

The company implemented a transformation plan last July in a bid to bolster various aspects of the business, from marketing to cost-saving.