Chinese sportswear company Li Ning plans to raise up to HK1.87bn through the sale of convertible securities as it works to turn around the brand.

The company said that over-expansion in the sporting goods industry has caused the build up of inventory for channel partners, which has adversely affected store productivity and profitability.

One convertible security worth HK3.50 will be offered to qualifying shareholders for every two existing shares.

"We are at a critical point in executing our plans and transforming our business," said founder and executive chairman Li Ning.

"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 a new sports marketing-driven and retail-oriented business model at this very challenging time for the sporting goods industry."

The group's turnaround plan, launched last July, is focused on reducing inventory levels - caused by the company's over-expansion - as well as getting newer products into stores and improving Li Ning's sales network.