Luckin Coffee Raises USD250 Million From Investors After the Accounting Fraud Sc...

Luckin Coffee Raises USD250 Million From Investors After the Accounting Fraud Scandal

Luckin Coffee Raises USD250 Million From Investors After the Accounting Fraud Scandal

April 16, 2021 1:55 pm

Beijing (PingWest)- China’s Luckin Coffee will likely to receive a USD250 million investment from existing shareholders Centurium Capital and Joy Capital to complete its restructuring plan.

The two funds agreed to subscribe a USD250 million worth of convertible share of Luckin Coffee in total via private placement, in which Centurium Capital invested USD240 million and Joy Capital invested in USD10 million.

The two funds may invest an additional USD150 million with the similar ratio based on the company’s situation.

The transaction is subject to several conditions, including the completion of a debt restructuring arrangement between Luckin Coffee and investors who hold USD460 million in convertible bonds, according to the statement.

On March 16, Luckin Coffee said on its website that it has reached an agreement with major creditors to restructure its capital structure that enable it to delay a USD460 million debt payment due in 2025.

Last year, an internal investigation concluded that net revenue of Luckin Coffee was inflated by about CNY2.12 billion (USD418.5 million) while costs and expenses were boosted by CNY1.34 billion. After the conclusion of the investigation, a majority of directors had ousted Luckin’s founder Lu Zhenegyao from the board.

The Securities and Exchange Commission in December, 2020 fined Luckin for USD180m penalty after finding it had set up a fake database as part of an effort to fabricate its accounts.

Luckin Coffee operates 4,000 stores across China, surpassing the total number of Starbuck’s store operating in the country.

SHARE