Caixin
Apr 16, 2021 07:45 AM
BUSINESS & TECH

Scandal-hit Luckin Coffee Gets $250 Million Investment

A sign for Luckin Coffee Inc. is displayed at one of the company's outlets in Shanghai
A sign for Luckin Coffee Inc. is displayed at one of the company's outlets in Shanghai

Chinese coffee chain Luckin Coffee Inc. said Thursday that it had reached a deal with investors to get $250 million investment in a latest effort to restore its business after a massive accounting fraud.

The investments, through a private placement, include $240 million from Centurium Capital and $10 million from Joy Capital, Lucking said in a filing. The investors also agreed to provide an additional $150 million to the company “under certain circumstances.”

Luckin Coffee said it plans to use the money to facilitate a proposed offshore restructuring and fulfill the obligations under its recently announced settlement with the U.S. Securities and Exchange Commission (SEC).

Luckin in March agreed with holders of its $460 million of convertible bonds to repay up to 96% of their holdings, based on face value. The company also agreed to pay $180 million fines in December to settle fraud charges from the SEC.

The formerly Nasdaq-listed startup sent jitters through the market after an internal audit revealed the company had made up $300 million in sales between at least April 2019 and January of last year. The case triggered a backlash from American regulators and politicians against U.S.-listed Chinese companies

The accounting fraud promoted Luckin to revamp its management and led to a series of lawsuits against the company. Luckin was delisted from the Nasdaq in June.

The company entered bankruptcy restructuring in July when a court in the Cayman Islands, where it’s registered, appointed two provisional liquidators to negotiate with creditors.

Luckin filed for bankruptcy protection in New York in early February. The petition, filed under chapter 15 of title 11 of the U.S. Code, is part of Luckin’s attempts to salvage its business in China and will effectively shield the company from lawsuits by U.S. creditors as it restructures.

Luckin said earlier that thousands of stores in China would remain open for business.

Centurium Capital, the largest institutional shareholder of Luckin, said the investment will improve the company’s balance sheet and help it focus on business development. Centurium said it is still confident about Luckin’s business outlook.

Contact reporter Han Wei (weihan@caixin.com)

Download our app to receive breaking news alerts and read the news on the go.

Follow the Chinese markets in real time with Caixin Global’s new stock database.

You've accessed an article available only to subscribers
VIEW OPTIONS
Share this article
Open WeChat and scan the QR code