Luckin Coffee trading halt to stay until Nasdaq request is met
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A Luckin Coffee store in Beijing on Feb 7. The formerly high-flying Chinese coffee chain is enmeshed in an accounting scandal that saw its shares plunge almost 80 per cent last week.
PHOTO: REUTERS
NEW YORK • Luckin Coffee's stock, which has not traded since Monday, will remain frozen until it satisfies Nasdaq's request for additional information, the stock exchange said on Thursday.
The formerly high-flying Chinese coffee chain is enmeshed in an accounting scandal that saw its shares plunge almost 80 per cent last week.
Nasdaq, which had halted Luckin trading with a "news pending" alert, has now changed that status to "additional information requested". The exchange declined to specify what information is being requested.
Luckin disclosed last week an internal investigation into alleged misconduct by chief operating officer Jian Liu, saying his team may have fabricated sales that could represent a significant portion of the firm's revenue last year. This sparked the worst crisis in confidence for Chinese companies listed in the US since a decade ago.
The disclosure surprised big-name backers, such as Citron Research, as well as investment banks including Morgan Stanley and Credit Suisse, which extended margin loans to Luckin's founder Lu Zhengyao, who defaulted after a collapse in Luckin stock.
Goldman Sachs said on Monday that an entity controlled by Mr Lu's family trust reneged on US$518 million (S$732 million) of margin debt and that lenders had seized as many as 76.4 million Luckin shares - almost 80 per cent of the company's total float. The stake was worth about US$335 million based on Monday's closing price, down from more than US$2 billion before the scandal emerged.
It is unclear whether the banks have sold the shares or whether they will be forced to book losses on their loans.
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