Luckin Coffee lenders seek to sell over 76 million shares after chairman defaults on loan
- Company’s stock plunges to its lowest-ever share price on Monday in New York
- The start-up’s chief operating officer has been suspended amid an investigation into possibly fabricated transactions
A group of lenders is seeking to sell more than 76 million shares of Luckin Coffee, pledged as loan collateral, after an entity controlled by the start-up’s chairman defaulted on a US$518 million margin loan, according to Goldman Sachs.
Goldman, which is acting as a “disposal agent”, said a syndicate of lenders is preparing to sell some 76.4 million shares pledged to secure the loan held by an entity controlled by a family trust of Lu Charles Zhengyao, an angel investor and chairman of Luckin, which is a rival to Starbucks in China.
Some of the shares were also pledged by an entity controlled by the family trust of founder and chief executive officer Qian Jenny Zhiya.
“In connection with the exercise of their rights under the facility, the lenders have commenced the process of enforcement against the collateral in order to satisfy the borrower’s obligations under the facility,” according to Goldman.
If all of the shares pledged were sold, Lu’s voting interest in the company would not decrease, but the beneficial and voting interests held by Qian would “decrease significantly”, the investment bank said.
