Drop does not fit narrative??? Ziggy
Luckin Coffee Nears Major Milestone with Imminent Emergence From Bankruptcy
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by The Bamboo Works, Contributor
March 9, 2022 10:35 AM | 5 min read
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Key Takeaways:
Luckin Coffee said the liquidators handling its U.S. bankruptcy have formally filed to close the case after a recent settlement with holders of $460 million of its convertible notes
Development could pave the way for company to relist on the Nasdaq, though the U.S. securities regulator could face pressure to veto such a move
By Doug Young
This is one liquid that China’s largest coffee purveyor won’t miss.
That’s the sentiment coming from Luckin Coffee Inc. (OTC:LKNCY), which has announced it is on the cusp of emerging from a prolonged bankruptcy liquidation following a year-long reorganization to put it back on solid financial footing. This particular development isn’t all that earth-shattering, as the company has been keeping everyone updated quite regularly on its efforts to return to financial health.
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Many believe the company’s ultimate goal is a return to the Nasdaq’s main board, where Luckin was briefly a favorite after it sold investors on its story of being a high-tech coffee purveyor that could challenge Starbucks (NASDAQ:SBUX) in the U.S. coffee giant’s second-largest market. But such a return could be difficult due to Luckin’s checkered history that got it kicked off the Nasdaq in June 2020, several months after it admitted to massive accounting fraud. But more on that later.
First, we’ll take a look at the latest announcement saying a Cayman Islands court has formally ordered an end to an ongoing liquidation of the company. In this case “liquidation” is probably a bit misleading, as it appears that true liquidation was never the actual goal and instead the company was working on an agreement to restructure the terms of $460 million worth of convertible bonds it previously issued.
It announced a completion of that restructuring in late January, and this latest announcement notes the Cayman Islands court officially accepted the deal on Feb. 25. Luckin added a court overseeing the bankruptcy in the U.S. also recognized the deal, and last Saturday the liquidators handling that matter filed a formal provision to officially close the case.
There’s no word if the U.S. court has officially accepted the request, but such a move seems almost guaranteed in light of its previous recognition of the settlement and the Cayman Islands cessation of the liquidation. In December 2020, the company also reached a separate settlement with the U.S. securities regulator that included its payment of a $180 million fine related to the fraud.
After all of those settlements and restructuring, the company is looking surprisingly strong with about 5 billion yuan ($792 million) in cash and cash equivalents in its coffers at the end of last September, according to its latest financial report for last year’s third quarter.
“The successful completion of the provisional liquidation is yet another positive step for Luckin Coffee, and has allowed us to significantly reduce our debt burden and improve the company’s capital structure,” said Chairman and CEO Guo Jinyi. “Operating from a position of financial strength, we are focused on executing our growth strategy and continuing to deliver industry-leading services and products to our customers and long-term value for our shareholders
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