Luckin Coffee settles US class action lawsuit with $187.5 million deal with investors
Luckin Coffee entered into a binding agreement to settle its US securities class action lawsuit with the lead plaintiffs’ claims against the company, which admitted in April 2020 for falsely fabricating $310 million in sales. Settlement amounts will be calculated based on a global settlement of $187.5 million, according to a company statement issued on September 22. According to the statement, the company and all claims that have been or could be filed on behalf of a class of purchasers of the company’s ADS between May 17, 2019 through July 15, 2020 have now been reconciled.
Luckin’s chairman and chief executive, Guo Jinyi, said “this settlement will resolve a “significant contingent liability” for the company, allowing it to “move forward with a greater focus on operations and execution of strategic plans.”
Luckin’s chairman and chief executive, Guo Jinyi
The company announced also a formal submission of a petition about the restructuring of Convertible Senior Notes to Cayman Court. The petition and summons for directions in the Cayman Court is in regard to a scheme of arrangement related to the restructuring of its $460 million 0.75% Convertible Senior Notes due 2025 proposed by the company and its joint provisional liquidators. It will also convene a single meeting of affected creditors to consider and approve the arrangement with or without modification. “Through this announcement, we have taken another important step in the restructuring process,” said Guo.
As of December 31, 2020, the cumulative number of transacting customers was over 64.9 million, compared to 40.6 million as of December 31, 2019. Average monthly total items sold in self-operated stores and unmanned coffee machines were approximately 26.2 million in 2020, compared to 24.2 million in 2019. As of December 31, 2020, Luckin Coffee had operated 3,929 self-operated stores in 56 cities in China and operated 874 partnership stores.
The fraud perpetrated by the once high-flying coffee chain has made regulators and investors more wary of Chinese companies in major stock markets.