Luckin Coffee’s convertibles restructuring becomes effective

By Sarah Lizee

Olympia, Wash., Jan. 31 – Luckin Coffee Inc. announced that, with the support of its joint provisional liquidators, the restructuring of the $460 million 0.75% convertible senior notes due 2025 under its previously announced scheme of arrangement has become effective.

“Luckin Coffee is moving forward from a position of financial strength and remains focused on the continued execution of our growth strategy,” Jinyi Guo, chairman and chief executive officer of Luckin Coffee, said in a Monday press release.

“The board and management team are confident in our future and our ability to deliver sustainable growth and profitability while providing outstanding products and services to our customers.”

In total, the company has issued scheme consideration of $245.5 million of cash, $109.9 million of 9% series B senior secured notes due 2027 and 9.24 million American Depositary Shares representing 73.89 million class A ordinary shares.

The new notes now represent the company’s only offshore debt securities.

The occurrence of the restructuring effective date follows unanimous approval of the scheme by the voting holders of the existing notes, sanction of the scheme in the Cayman Islands and recognition and enforcement of the scheme in the United States, each of which was uncontested, the company said.

The parties to the amended winding up petition dated Jan. 7, 2021, which preceded the application by the company for the appointment of joint provisional liquidators, expect to apply consensually to the Cayman court for leave to withdraw or have the petition dismissed, with resultant discharge of the joint provisional liquidators, as soon as possible.

Alexander Lawson of Alvarez & Marsal Cayman Islands Ltd. and Wing Sze Tiffany Wong of Alvarez & Marsal Asia Ltd. have served as joint provisional liquidators of the company since July 15, 2020.

Luckin Coffee is advised by Davis Polk & Wardwell LLP as legal counsel, Harney Westwood & Riegels as Cayman Islands legal counsel and Houlihan Lokey as financial adviser.

The joint provisional liquidators are represented by DLA Piper LLP (US) in the United States and Campbells LLP in the Cayman Islands.

Holders of existing notes may contact Houlihan Lokey at HL_Lake@HL.com or the joint provisional liquidators at luckin@alvarezandmarsal.com with any questions regarding the scheme and related proceedings.

The coffee chain is based in Beijing. The company filed Chapter 15 bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on Feb. 5, 2021 under case number 21-10228.

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