Luckin Shares Down 12% After Another Delisting Notice

Just another warning for trouble-ridden Chinese Starbucks-wannabe. Do we even want to see the financial "figures?"

Author: Anna Vodopyanova   

Luckin Coffee (Nasdaq: LK) ended Tuesday with a 12% decrease after it reported a repeat delisting notice from the stock exchange.

The Chinese coffee giant filed a notice with SEC today saying it has received another warning from the Nasdaq Stock Market stating Luckin's failure to file an annual report for 2019. That's in addition to the delisting notice Luckin received in May following uncovered fraud amounting to 2.2 billion yuan at formerly China's fast-rising star company.

In today's filing, Luckin said, "The Company has been working diligently to explore possible ways to file the Annual Report as soon as possible. However, the Company has not been able to file the Annual Report due to the impact of the delayed financial statement preparation process caused by COVID-19 and the pendency of the previously disclosed internal investigation."

On Monday, Pandaily reported that Luckin's lenders, led by its main underwriter, Credit Suisse, won the court battle in Cayman Island to take over the assets of Luckin's chairman, Zhengyao Lu. The company owed $324.1 million to the creditors; another $300 million shortfalls in margin loans remain for Credit Suisse and Morgan Stanley for LK stock, according to Bloomberg.

Under the court ruling, Lu's two holdings, Primus Investments Fund and Mayer Investments Fund will be liquidated. Lu's family trust, Haode Investment Inc., is also under threat, as is his position as the head of Luckin Coffee. Earlier this month, Lu had resigned from Car Inc., China's largest rental car company.

On July 5, Luckin plans to hold a general meeting and discuss the restructuring of its top management. Former CEO Jenny Zhiya Qian and COO Jian Liu have already been sacked from the company. Then, the chairman himself reportedly came under fire after investigators found emails that allegedly showed his role in the company fraud.

LK stock closed at $2.79 per American depositary share today – that's compared with over $50 per share in January before it got hit with a short-seller report.

Last week, Thinknum reported that Luckin has been closing its locations – their number has dropped about 12% from about 6,800 to 6,020 in early June.