Luckin Coffee (OTC: LKNCY) announced Thursday that it has entered into an investment agreement with an affiliate of Centurium Capital and Joy Capital.
Centurium Capital and Joy Capital are both leading private equity firms in China and shareholders of Luckin Coffee.
Under the agreement, Centurium Capital has agreed to invest approximately $240 million in a private placement of Luckin Coffee's senior convertible preferred stock.
Joy Capital has also agreed to invest approximately $10 million in a private placement of Luckin Coffee's Senior Convertible Preferred Stock.
Under certain circumstances, Centurium Capital and Joy Capital may also invest an additional $150 million on a pro-rata basis.
Luckin Coffee plans to use the net proceeds from this investment to advance the company's proposed offshore restructuring and to meet its obligations under its recent settlement agreement with the Securities and Exchange Commission (SEC).
The transaction helps Luckin Coffee continue to execute its business plan, focus on growing its core coffee business and achieve its long-term growth objectives.
In February, Luckin Coffee announced that it had reached a settlement with the SEC regarding the financial fraud of some of its former executives and employees. The settlement was approved by the U.S. District Court for the Southern District of New York on Feb. 4, 2021.
Luckin Coffee's shares traded on the over-the-counter market were up approximately 16 percent in early trading.
Luckin Coffee stock jumps over 40% as it signs restructuring deal with major debt holders
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