Li Ning to raise HK$1.8bn via open offer

Under the Open Offer, each Convertible Security in the principal amount of HK$3.50 (convertible into one Share at a conversion price of HK$3.50each) is offered to qualifying shareholders for every two existing Shares. The conversion price of HK$3.50represents a 43.64% discount to the Group's closing share price on the last trading day. Such Convertible Securities are readily convertible into common shares of the Group, and will be treated as equity from an accounting perspective.

Viva China Holdings Ltd TPG and GIC, who are the Group's existing shareholders and/or bondholders, have committed to subscribe to the Convertible Securities based on their assured entitlements in the Open Offer.In addition,Viva China and TPG will underwrite 60% and 40%, respectively, of all the Convertible Securities not taken up by other shareholders.

Mr. Li Ning, Founder and Executive Chairman of the Group, commented, "We are at a critical point in executing our plans and transforming our business. The additional capital to be raised through the Open Offer and continued support from its key stakeholders 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.

The key investors' increased commitment and contribution to the Group's future growth is a boost of confidence for the Group as it pioneers new sports marketing-driven and retail-oriented business model at this very challenging time for the sporting goods industry."

Over-expansion in China's sporting goods industry has caused the building up of inventory for channel partners, which has adversely affected store productivity and profitability and led to deteriorating financial positions. Over the past two years, problems in the Group's sales channels have started to gradually impact the Group's financial position. Furthermore, the Group's debt level may begin to impact management's ability to make optimal decisions including investments into the Group's operations.

When the situation deteriorated further in 2012, management acted quickly by implementing a comprehensive Transformation Plan in July 2012. As part of the Transformation Plan, the Group has introduced strong additions to the management team who have in turn put in place a new vision for the Group and implemented initiatives on all fronts including marketing, product/merchandising, sales channels, cost savings and cash flow management, and building the foundation of an industry-leading platform.