You need to do the V2V of the VM. In the Disk option, You can reduce the space.
If you use VOLUME based cloning you can select only the volume which you want to shrink and perform the convert
Yes you can use VMware Converter..
Converter for this task is like using a Space Shuttle to get to the next kebab booth
simply add a new disk in the size that fits better
then transfer the data via robocopy
after the copy is done you power off the VM and remove the old oversized vmdk and replace it with the new one