(Updates with more quotes, details)
By Victoria Bryan
BERLIN, Aug 21 (Reuters) - Sponsors Puma, Evonik and Signal Iduna will buy a stake in Borussia Dortmund as the Ruhr Valley club raises funds to compete with Bayern Munich, the German league champions.
Dortmund BVB.DE said on Thursday they will issue up to 24.5 million shares in a capital increase worth up to 114.4 million euros ($152 million) to boost finances and reduce its debt.
Sportswear company PUMA, eager to strengthen its sporting credentials in a turnaround plan that breaks with a previous focus on sports-inspired fashion, said it was ready to buy a stake in the team that finished second last season.
"Sports company PUMA intends to take a direct stake in Borussia Dortmund KGaA, having sponsored the football club since 2012," Puma said in a statement.
"By potentially acquiring up to five percent of its capital stock through the planned capital increase announced today by Borussia Dortmund, PUMA seeks to underpin its long-term, strategic partnership and to intensify the cooperation with one of Germany's top clubs."
BRINK OF BANKRUPTCY
On the brink of bankruptcy less than a decade ago, Dortmund are following in the footsteps of Bayern Munich, who have sold stakes in Germany's pre-eminent club to commercial partners Adidas, Audi and insurer Allianz.
"We are delighted that Evonik, PUMA and SIGNAL IDUNA, the three most important sponsors of Borussia Dortmund, have decided to take a stake," said club CEO Hans-Joachim Watzke.
"Borussia Dortmund in turn will not only profit financially from the agreed alliances but is looking forward to intensive networking both at home and abroad."
Dortmund posted a turnover of 260 million euros for the 2013-14 season. Shares in Germany's only listed football club were trading up following the announcement, at just below five euros.
New shares will be offered at 4.66 euros. Puma PUMG.DE, Evonik EVKn.DE and Signal Iduna, who have bought the stadium's naming rights, have agreed to subscribe to a certain number of shares, Dortmund said.
Dortmund won the Bundesliga title in 2011 and the domestic league and Cup double in 2012, but have been forced to sell many of their top players in recent seasons.
They plan to use some 40 million of the cash increase to reduce their debt. This will allow the club to release more funds for transfers and salaries as they look to hold on to big-name players including Marco Reus, linked with a possible move to Bayern Munich among others, and captain Mats Hummels, a transfer target for several top European clubs.
"It is the company's intention to use an amount of about 40 million euros of the expected gross proceeds... for reducing the company's indebtedness," Dortmund said in their statement. (1 US dollar = 0.7540 euro) (Reporting by Reporting by Victoria Bryan and Karolos Grohmann, Writing by Karolos Grohmann, Editing by Robert Woodward)