Ruixing Coffee is currently in a situation where Ruixing Coffee has reached a restructuring support agreement with creditors after bankruptcy

At the end of 2020, the US Securities Regulatory Commission (SEC) filed a complaint against Luckin Coffee, alleging that his financial affairs were fraudulent. In retrospect, it has been nearly a year since the initial outbreak of Luckin Coffee's case. Although Lucky continues to make up for the negative impact caused by fabricated transactions, the matter has not been finally resolved.

After Luckin Coffee filed for bankruptcy, another major incident occurred on the evening of March 16. Luckin Coffee announced on his website that he was conducting exclusive negotiations with investors on financing of at least 250 million US dollars.

Luckin Coffee has reached agreements with major debt holders to restructure debt and strengthen the capital structure, according to China Finance and Finance. Most of the holders who hold 10.75% of their $460 million of convertible preferred notes due in 2025 have signed restructuring support agreements, which are expected to receive 91-96% of the face value of existing bills.

At the same time, the announcement also disclosed a suspected debt-to-equity swap plan.

According to the announcement, if Lucky is able to raise $50 million or more of equity before the effective date of the restructuring, each holder of existing instruments will have the option to replace the principal amount of $50 million of new note A for every $230new note An in the form of American depositary shares or note B and / or cash, subject to a top-up mechanism that guarantees a recovery rate of 150 per cent of the conversion amount.

Lucky also indicated that as of February 28, 2021, the Company's unaudited consolidated cash balance (excluding restricted cash and illiquid investments) was approximately $775 million.

Luckin Coffee also said in a statement: the company is actively using a variety of channels for financing and is currently conducting 30 days of exclusive internal discussions with a reliable investor with a view to raising at least $250 million in equity financing through private financing.

In addition, in the near future, Luckin Coffee will also start the application process related to reducing the registered capital and remittance of companies in China in accordance with Chinese law, and the reduced funds will be used to fulfill the debt obligations under the agreement.

Luckin Coffee's official website

With regard to the above news, Ruixing said that the restructuring support agreement will not affect cooperation with existing suppliers and partners, and Ruixing Coffee will fulfill its payment obligations to suppliers on time. Luckin Coffee Chairman and CEO Guo Jinyi said, "Lucky's board of directors and management team agree that restructuring the support agreement is a win-win result, and the company will continue to take positive measures to improve its capital structure in the future. At the same time, we continue to provide customers with excellent products and services. "

On February 5, 2021, Luckin Coffee suddenly filed for bankruptcy protection, coupled with the fact that there had been infighting among senior staff before, which made everyone think that Luckin Coffee was going to get cold, but soon, Luckin Coffee responded by releasing a message on the official Weibo: applying for bankruptcy protection is good news. At the same time, Luckin Coffee also stressed that the company and stores operate stably and everything is normal. Will continue to provide consumers with high-quality, cost-effective products and services, this does not make everyone panic.

In addition, Luckin Coffee spent $180 million (1.175 billion yuan) on the "scandal" on December 17 last year, mainly to settle with SEC over suspected financial fraud of some former employees, but the settlement had not yet taken effect. It was not until the evening of February 8 this year that the court agreed to Luckin Coffee's settlement with SEC with compensation of 180 million US dollars. To a large extent, the court's decision allowed Luckin Coffee to avoid administrative punishment and maintain the normal operation of the company at the lowest cost. However, after the fine of nearly 1.2 billion days, Luckin Coffee still faces securities class action by investors (civil lawsuit) and charges against senior executives by the US Department of Justice (criminal lawsuit), which may take at least 2 to 3 years, while criminal cases may take longer.

When on earth will Luckin Coffee's "scandal" subside?

* Image source: Internet