The Li Ning Company wants to raise up to HK$1.87 billion (€176.5m-$241m) through an open offer of convertible securities, to complete its wide-ranging restructuring moves and investments in the Li-Ning brand.

The company's shares were pummeled on Jan. 25 when it announced the offer, which allows existing shareholders to swap two existing shares for one security that can be converted to one share at HK$3.50 (€0.33-$0.45).

The company said that the initial conversion price of HK$3.50 for each conversion share represented a discount of about 43.64 percent to the closing price of HK$6.21 (€0.59-$0.80) when trading was suspended on the day before the announcement.

Analysts were apparently taken aback by the steep discount offered by the company: Some regarded it as an indication that Li Ning urgently required capital to go ahead with its investments, and that the turnaround could take longer than expected.

Li Ning said that it had secured the commitment of large shareholders to take up their share of the offer. Among them was Viva China Holdings, which is partly owned by the company's founder, the former Olympic gymnast Li Ning, and which held 25.23 percent of the company's capital when the deal was announced last week. The two others are TPG, the U.S. private equity fund; and GIC, the Singapore sovereign wealth fund. Viva China and TPG have also agreed to underwrite the convertible securities not taken up by other shareholders, at 60 percent for Viva China and 40 percent for TPG.

As we have previously reported, Li Ning started implementing a restructuring plan in July, and in December it added that it would suffer a substantial loss for 2012, chiefly due to onetime costs of 1.4 to 1.8 billion yuan renminbi (€211.6m-$288.8m) relating to a radical retail cleanup plan. The measures are meant to help clear the inventories that have been clogging parts of the Chinese market for the last two years by subsidizing clearance sales and even buying back products – albeit mostly in the form of trade credits.

As previously detailed, the company also wants to invest more in branding and product development, and to reduce its product range. It will put increased emphasis on sports performance products to distinguish itself from the increasingly plentiful and competitive offer in the Chinese fashion market.