Li Ning to raise HK$1.8bn via open offer

As previously announced, the costs associated with the Channel Revival Plan will be mostly non-cash and take on the form of trade credits. A key part of the Channel Revival Plan is replenishing channels with new inventories with more rationalized SKUs, improved pricing strategy, broader and more targeted coverage of key demographics and sports marketing strategy highly focused on the Group's core market, products and sports, which the management believes will start generating healthy performance in the channels.

The Group has reviewed alternative sources of funding for the implementation of the Transformation Plan, with a view to maintain its leadership in the dynamic sporting goodsmarket and pursue long-term and sustainable growth.The Board considers that the Open Offer is in the interests of both the Group and its shareholders as it provides an equitable means for the Group's qualifying shareholders to participate in the future development of the Group and the opportunity to maintain their respective shareholding interests.

In light of the Group's financial need and its desire to optimize its capital structure, the Group has also entered into a deed of amendment with each of TPG and GIC (the "Investors"), who are existing convertible bondholders, to amend certain terms of the original bond subscription agreements and the convertible bonds which allows the Group greater flexibility to achieve its strategic and operational goals.

Following the execution of the deeds of amendment, the Investors will make a number of fundamental concessions on their rights as bondholders under the original bond subscription agreements and convertible bonds executed in January 2012 (the 2012 CBs), including waiving financial covenants and restrictions/thresholds on capital raisings, debt financings and transactions (such as disposals and acquisitions) to be conducted by the Group.

In exchange for the amendments to the 2012 CBs, the Group and the Investors have also agreed to change the initial conversion price for the 2012 CBs from HK$7.74 (or HK$6.53 adjusted for the Open Offer according to the anti-dilution clause in the 2012 CBs contract) to HK$4.50 per share, which now represents a 3.64% discount to the 90-day average trading price and a 28.57% premium over the Open Offer price.

Mr. Jin-Goon Kim, Executive Vice Chairman of the Group and Partner of TPG, commented, "Li Ning Company and TPG are pleased with the development and the progress made to date on the implementation of the Transformation Plan. TPG is further strengthening its commitment to the Group by committing to subscribing to the Open Offer and underwriting a significant portion of the Open Offer to increase its investment in the Group."

Li Ning Company