Thursday 18 August 2022

Luckin Coffee announces approval by creditors of a scheme of arrangement

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BEIJING, China – Luckin Coffee Inc. (in Provisional Liquidation) (“Luckin Coffee” or the “Company) (OTC: LKNCY) announced that a meeting was held yesterday in Grand Cayman, Cayman Islands regarding the previously announced scheme of arrangement (the “Scheme”) proposed in relation to the restructuring of its $460 million 0.75% Convertible Senior Notes due 2025 (“Existing Notes”). The meeting was convened for the purpose of allowing the Company’s class of creditors affected by the Scheme (the “Scheme Creditors”) to consider and, if thought fit, approve, with or without modification, the Scheme.

The Company is pleased to announce that at the meeting held at 10:00 a.m. (Cayman Islands time) on November 30, 2021, Scheme Creditors present and voting at the meeting (in person or by proxy) voted unanimously to approve the Scheme, with no votes cast against the Scheme. The meeting was attended by fifty-six Scheme Creditors representing approximately 97.7% in aggregate outstanding principal amount of the Existing Notes. Accordingly, the Scheme has been approved by the requisite majority of Scheme Creditors.

As previously announced, Luckin Coffee filed a summons for directions and petition seeking sanction of the Scheme in the Grand Court of the Cayman Islands (the “Cayman Court”) on September 20, 2021. The Scheme was proposed by Luckin Coffee and its Joint Provisional Liquidators.¹

Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee, said, “While this development represents another important step in the Company’s continued restructuring process, the overwhelming support from our creditors serves as a testament to the progress our refreshed board of directors and leadership team have achieved and the positive momentum we have generated. We thank our creditors for their support throughout this process. Our team at Luckin Coffee remains focused on the execution of our strategy, delivering sustainable growth and profitability, while providing outstanding products and services to our customers and meaningful value for our shareholders.”

Sanction Hearing

Following yesterday’s approval by the Scheme Creditors, the hearing of the Company’s petition for sanction of the Scheme by the Cayman Court will take place at 10:00 a.m. (Cayman Islands time) on December 13, 2021. All Scheme Creditors are entitled to attend and be heard at the hearing.

Additional Information

In connection with the Company’s debt restructuring and the Scheme, 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 advisor. 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.

1 As previously reported, on July 15, 2020, the Cayman Court appointed Alexander Lawson of Alvarez & Marsal Cayman Islands Limited and Wing Sze Tiffany Wong of Alvarez & Marsal Asia Limited to act as “light-touch” Joint Provisional Liquidators of Luckin Coffee (the “Joint Provisional Liquidators”). Luckin Coffee continues to operate its business under the day-to-day control of its Board of Directors under the supervision of the Joint Provisional Liquidators.

In a separate release, the company also announced that it has closed its previously announced investment agreement with an affiliate of Centurium Capital (“Centurium Capital”), as the lead investor.

The Company issued and sold a total of 295,384,615 senior convertible preferred shares to Centurium Capital through a private placement, with aggregate gross proceeds of approximately US$240 million. The investment by Centurium Capital enables Luckin Coffee to focus on the continued expansion of its core coffee business, execution of its business plan and achievement of its long-term growth targets.

Luckin Coffee intends to use the investment proceeds to facilitate its proposed offshore restructuring, including (i) funding the settlement of In re Luckin Coffee Inc. Securities Litigation, Case No.1:20-cv-01293-JPC-JLC (SDNY) (the “Class Action”) pursuant to the terms of the Stipulation and Agreement of Settlement, which has been preliminarily approved by the U.S. District Court overseeing the Class Action, (ii) payments to the holders of its $460 million 0.75% Convertible Senior Notes due 2025 pursuant to the scheme of arrangement Luckin Coffee previously announced and (iii) other offshore restructuring expenses.

Luckin Coffee has made separate arrangements with Joy Capital to close its portion of the investment agreement, totaling approximately US$10 million in senior preferred shares. Both Centurium and Joy Capital are leading private equity investment firms in China and current shareholders of Luckin Coffee.

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