Luckin Coffee Chairman Defaults on Loan, Surrenders Company Shares

Updated: 2020-04-06 21:31:02

HONG KONG/NEW YORK—Luckin Coffee Chairman Charles Zhengyao Lu and Chief Executive Jenny Zhiya Qian have handed over shares in the embattled Chinese coffee chain to lenders. The company—controlled by Lu’s family defaulted on a $518 million margin loan, one of the banks said on Monday.

The default comes after Luckin, a significant rival to Starbucks in China, said last week that much of its 2019 sales were fabricated, sending its shares plunging as much as 82 percent in U.S. trading and sparking an investigation by China’s securities regulator.

Some 515,355,752 class B shares and 95,445,000 class A shares of Luckin had been pledged to secure the loan, including shares additionally pledged by the family trust of Qian, Goldman Sachs Group Inc. one of the banks involved, said in a note to clients on Monday while proposing a sale of the shares.

Luckin declined to comment. Lu Zhengyao did not immediately respond to a request for comment. It was not possible to contact Qian directly.

If all the shares pledged under the $518 million loan are sold, Lu Zhengyao’s voting interest in Luckin Coffee will not decrease. In contrast, Qian’s beneficial and voting interests would drop significantly, Goldman Sachs said, without quantifying the size of the reduction.

The class B shares will be converted into American Depositary Shares (ADSs).

Luckin shares were down a further 13.8 percent in early trading in New York on Monday.

By Julie Zhu, Jennifer Hughes, and Joshua Franklin

Go Back: China News
source : www.theepochtimes.com
''