Li Ning shares financing to support the full development of the company

The famous domestic sports brand enterprise Li Ning announced on January 25 that it will raise about RMB 1.5 billion in funds by publicly offering convertible securities to support the company’s long-term sustainable development strategy and operational goals and make its capital The structure is more rationalized.
The famous domestic sports brand enterprise Li Ning announced on January 25 that it will raise about RMB 1.5 billion in funds by publicly offering convertible securities to support the company’s long-term sustainable development strategy and operational goals and make its capital The structure is more rationalized. The company said that investors including Viva China, TPG and Singapore Government Investment Corporation (GIC) have promised to subscribe for the convertible securities in full amount, which fully demonstrates their confidence in Li Ning.

This is another major move taken by Li Ning after it announced on December 17, 2012, a "Channel Recovery Plan" aimed at accelerating the backlog of inventory backlogs, revitalizing downstream effective circulation, and enhancing channel profitability.

After Li Ning issued a related announcement in Hong Kong on the morning of January 25, Li Ning, the founder and executive chairman of the company, and Jin Zhenjun, executive vice president of the company, introduced the financing situation and interviewed the reporter about the contents of the announcement.

According to reports, this fundraising is used for the development of companies, including the implementation of an overall change plan, to enrich general working capital, and to optimize the capital structure. Existing shareholders and bondholders including Viva China, TPG and GIC have pledged to subscribe for the convertible securities in full, and at the same time, Viva China and TPG will underwrite 60% and 40% of the shares that are not subscribed by other shareholders. The move of convertible securities, existing shareholders and bondholders fully demonstrated investors' confidence in Li Ning.

Li Ning Company stated that in order to ensure sufficient working capital and rationalize the capital structure and provide a continuous and stable platform for the smooth progress of the reform plan, to maintain its leading position in this rapidly changing sportswear industry and pursue long-term and sustainable growth. The company considered various funding options. Finally, its Board of Directors believes that raising funds by way of public offering of convertible securities is in the interests of the company and the shareholders as a whole, so that qualified shareholders of the company can have the opportunity to participate in the future development of the Group in an equity manner while protecting the interests of their shareholders.

Faced with the economic slowdown, the entire sports industry is facing great challenges. In 2012, it was considered as the collective winter of sports brands. In order to embark on the path of resuming growth as soon as possible, Li Ning has re-adjusted its strategy and tactics. In general, it is the dream of building the Li Ning brand into a great Chinese sports brand; focusing on the core brand Li Ning and focusing on core business sports products. The business focuses on the three focuses of the core market China market and four strategies including channel efficiency, brand and product, operational capabilities and business model reforms.

Li Ning said in a video interview that “Li-Ning is in a critical period of transformation and is currently advancing and implementing a number of plans. This time through the funds raised by existing shareholders’ subscriptions and the support of major shareholders for the company’s continued support. In the new era in which the Group will return to the long-term sustainable growth and profit development track, it will provide a stable platform and backing for the company."

He said that the major shareholder’s commitment and contribution to the future development of Li Ning is increasing day by day, and has become the driving force behind the Group’s innovative retail-oriented and sports marketing-led business model in the downturn of the industry. The above companies promised to purchase these convertible securities, indicating that they are optimistic about the future of Li Ning, and believe that Li Ning will lead the industry to recover soon.

Mr. Jin Zhenjun, a partner of TPG and also an executive vice president of Li Ning, said when he talked about the financing: “Li Ning and TPG are pleased with Li Ning’s current progress in stabilizing and rationalizing operations, advancing and implementing the change plan. By fully approving convertible securities in open offerings and participation in underwriting, TPG will further increase its investment in Li Ning and strengthen the depth of cooperation between long-term strategic investors and the group."

Relevant data show that in the general environment of economic downsizing, the previous over-expansion of the sportswear industry led to the pressure on channel partners' inventory, which seriously affected the sales turnover, profitability and overall financial status of the stores. The industry believes that this financing will play a very important role for Li Ning to enhance the balance of capital and liabilities, increase liquidity to support its transformation strategy, focus on retail sales and clear inventory.

After realizing the changes in the environment, Li Ning immediately made rapid changes in early 2012, began to adjust its strategy and gradually changed its business model, and launched a comprehensive reform plan in July of that year. At the same time, according to the forward-looking strategy of the company's future development, it is innovative and enterprising in human resources, sports marketing, and channel recovery. At the same time, it has taken a series of measures in terms of cost saving and cash flow management to create a ready-to-get sports retail operating platform. Solid foundation.

Since July last year, Li Ning has made many changes in its development. Apart from sponsoring the CBA and signing Wade, several outstanding management talents have been introduced one after another to create a leadership team that can adapt to new forms, including the new Chief Marketing Officer. , Chief Supply Chain Officer, Product Officers and Designers are already in place.

More importantly, Li Ning announced on December 17, 2012, a channel revival plan to speed up inventory clearance and increase the profitability of retail channels. This plan, which lays the foundation for Li Ning's growth and is expected to lead the recovery of the entire industry, quickly attracted the attention of the market.

Channel inventory is now the most pressing issue facing the entire sporting goods industry. The backlog of old goods, poor channels, and efficiency are greatly hindered. In this context, Li Ning first stood up to face the problem and propose a corresponding solution, showing its leadership as a leader in the domestic sporting goods industry.

When answering whether the financing was due to a channel revival plan, Jin Zhenjun said, “It has been announced previously that most of the costs of the channel revival plan are non-cash, offset by accounts receivable. However, one of the key steps in implementing the plan is to A reasonable product portfolio replaces old inventory.” He said that he will increase the proportion of new products and optimize product mix, optimize pricing strategies, better cater to the needs of a wide range of target consumer groups, and coordinate with Li Ning’s core markets, products and sports. A consistent strategy for sports marketing promotion will effectively promote the healthy development of channels. Replacing old stagnant inventory with new and popular items will increase the group's demand for working capital during this phase of change.

In addition, in view of Li Ning’s financial needs and its desire to optimize its capital structure, it has reached an agreement with the existing convertible bond holders TPG and GIC to revise the terms of their convertible bond contracts. These adjustments aim to give Li Ning more room and flexibility to achieve its long-term and sustainable growth strategy and operational goals. According to the revised contract, the two companies will make loose adjustments to some of the basic conventions of the convertible bond agreement signed in January 2012, involving exemptions from certain restrictions and thresholds on financing, debt financing, and sales and acquisition transactions. .

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