TPG-backed Li Ning warns of loss for 2012

The loss is expected to be primarily attributable to one-time costs relating to the implementation a $288 million transformation plan. It includes a range of initiatives focusing on support for channel partners' inventory clearance, inventory buy-back, sales network rationalization as well as customized programs to restructure the accounts receivable from individual participants.

The sportswear company, which operates around 7,000 outlets across China, has struggled in recent years after a failed attempt to reposition the brand and challenge the likes of Nike and Adidas. The company has since lost market share to local rivals in second- and third-tier markets as well as trailing Nike and Adidas in top-tier locations.

"The group's previous wholesale business practice, which had allowed the company to quickly capture market share in the Chinese sporting goods industry through aggressive network expansion, was no longer able to respond quickly to the dramatic slowdown and saturation of the industry in the last few years," Li Ning said in a statement filed with the Hong Kong Stock Exchange.

In February, Li Ning sold RMB750 million ($119 million) in convertible bonds to TPG and GIC. If fully converted, TPG would own 12% of the company, while GIC's holding rose to 8%, up from 6% prior to the deal.

Jin-goon Kim, a TPG executive who previously turned around Chinese women's shoe retailer Daphne, was appointed executive vice chairman of Li Ning in July. The move came as CEO Zhiyong Zhang stepped down and was replaced by founder Li on an interim basis. In October, CFO Yik-Kay Chong also left the company.

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• Topics
• Greater China
• Consumer
• Consumer
• TPG Capital
• Distress
• GIC Private