US Court Approves Luckin Coffee’s $460 Million Debt Restructuring
In the early morning of Friday, December 17, Chinese coffee company Luckin Coffee’s debt restructuring plan received recognition from a federal judge in Manhattan, which means that the arrangement made in the Cayman Islands court can be implemented in the United States. According to court documents, holders of $460 million notes will receive $320 million in cash plus new bonds.
The plan also settled many lawsuits initiated by shareholders after Luckin Coffee was accused of falsely reporting sales. The company’s top management continues to deal with some shareholder lawsuits. Luckin Coffee’s US stock price in pink sheet trading is currently down 2.2%.
Earlier, Luckin Coffee announced that the Grand Court of Cayman Islands had approved the plan put forward by the company and received the support of its joint provisional liquidators. The plan involves restructuring its US $460 million convertible senior notes due in 2025 with an annual interest rate of 0.75%.
The debt restructuring plan of Luckin Coffee was put forward in September of this year, and was approved by creditors, but not passed by the court. Recently, the Grand Court of Cayman Islands approved the restructuring plan, which should reduce the negative impact of the accusations of financial fraud.
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On December 10, Luckin Coffee announced its financial report for the third quarter of 2021. According to the financial report, its revenue in the third quarter was 2.35 billion yuan (about $365 million), an increase of 105.6% compared with 1.143 billion yuan in the same period of last year, with a net loss 23.5 million yuan and a loss contraction of 98.6%.