Luckin Coffee is in talks with private equity (PE) firms for a new round of investment, and from more than one investor, Chinese media outlet PEdaily reported Wednesday.
The report said the parties have not yet determined the amount of the investment, and while it is not yet finalized, the details match what Luckin Coffee has announced, which is "at least $250 million".
On the evening of March 16, Luckin Coffee announced on its website that it had entered into a restructuring agreement with the majority holders of its $460 million convertible senior notes due 2025 and will fulfill its debt obligations under that agreement in the near future.
Luckin Coffee expects that the restructuring will provide existing noteholders with approximately 91%-96% of the face value of the notes as compensation.
The announcement also disclosed that Luckin Coffee is actively using multiple sources of financing and plans to raise at least $250 million through a private placement.
The announcement indicated that as of February 28, 2021, Luckin Coffee had cash (excluding restricted cash and illiquid investments) of approximately $775 million, which is sufficient to secure the required payments for the debt restructuring.
As a result, Luckin Coffee rose over 49% in the US pink sheets market and increased its market capitalization by over $700 million.
In January 2018, Luckin Coffee opened its first coffee store in Beijing and then kicked off a frenzied expansion.
The company opened 2,000 stores in China in less than a year, compared to the 17 years it took Starbucks to reach that level of stores.
Eighteen months after its founding, the "unicorn", burdened with huge losses, went public on the Nasdaq market, setting a record for the fastest Chinese coffee brand to go public in the US since its founding.
However, its myth was soon shattered when, on April 2, 2020, nearly one year after its IPO, Luckin Coffee unexpectedly revealed itself to have committed financial fraud.
The company announced an investigation showing that its COO, Liu Jian, and some of its employees had falsified transactions worth approximately RMB 2.2 billion.
48 days later, 12 months after its IPO, Luckin Coffee received a delisting notice from Nasdaq.