Cayman Court Waters Down Chairman’s Stake in Luckin Coffee
What’s new: The ownership and voting stakes in scandal-plagued Luckin Coffee held by Chairman Lu Zhengyao and former CEO Qian Zhiya have dropped sharply following a court hearing in the Cayman Islands.
The pair now hold a combined 45.05% of Luckin’s voting shares, down from a previous total of more than 75% held by them and Lu’s sister in January; while their combined ownership stake has dropped to 12.45% from 49.09%, according to a copy of the court document seen by Caixin.
The court made its decision on June 16.
What’s the background: A banking consortium had brought the case to the Cayman Islands court after an investment company controlled by Lu, also known as Charles Lu, defaulted on a $518 million margin loan facility backed by the consortium. Shares held by Lu and Qian, also known as Jenny Qian, had been pledged as collateral against the facility.
Luckin has been in a state of turmoil since its shock disclosure in April that nearly half of its revenue may have been faked during the last three quarters of last year.
Qian was forced out in May after the board determined she had knowledge of the fraud, and Lu is also likely to leave his role as chairman after a meeting of the company’s board on Thursday and another of company shareholders set for July 5. Luckin is also set to be delisted from the Nasdaq.
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