Thursday 07 July 2022

Luckin Coffee states its restructuring effective date in relation to the Convertible Notes due 2025 has occurred

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BEIJING, China – Luckin Coffee Inc. (in Provisional Liquidation), with the support of its Joint Provisional Liquidators,¹ yesterday announced that pursuant to its previously announced scheme of arrangement (the “Scheme”), all of the conditions precedent to the effective date of the restructuring contemplated in the Scheme (the “Restructuring Effective Date”) have been satisfied (or otherwise waived)².

Accordingly, the Scheme—which governs the restructuring of Luckin Coffee’s US$460 million 0.75% Convertible Senior Notes due 2025 (the “Existing Notes”)—has been substantially consummated and the Restructuring Effective Date has occurred.

“Today’s development marks the culmination of extraordinary efforts from the Luckin Coffee team and outstanding support from our creditors and stakeholders,” said Dr. Jinyi Guo, Chairman and Chief Executive Officer of Luckin Coffee. “We have greatly appreciated the professionalism and guidance of the Joint Provisional Liquidators throughout this pivotal and transformative process. Luckin Coffee is moving forward from a position of financial strength and remains focused on the continued execution of our growth strategy. 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 aggregate, the Company has issued Scheme Consideration totaling US$245.5 million of cash, US$109.9 million of 9.00% Series B Senior Secured Notes due 2027 (the “New Notes”) and 9,235,902 ADSs representing 73,887,216 class A ordinary shares.³ 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. A copy of the notice of the occurrence of the Restructuring Effective Date is attached as Exhibit 99.2 to the Current Report on Form 6-K furnished by the Company to the Securities and Exchange Commission today.

The parties to the amended winding up petition dated January 7, 2021 (the “Petition”), 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 reasonably practicable. Alexander Lawson of Alvarez & Marsal Cayman Islands Limited and Wing Sze Tiffany Wong of Alvarez & Marsal Asia Limited have served as Joint Provisional Liquidators of the Company since July 15, 2020.

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. 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.

¹ As previously reported, on July 15, 2020, the Grand Court of the Cayman Islands (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 and the supervision of the Joint Provisional Liquidators.
² Terms used but not otherwise defined herein have the meaning given to them in the Scheme.
³ Due to the sufficiency of funds available on the Restructuring Effective Date, the New Notes A Replacement as contemplated under the Scheme was effectuated and the 9.00% Series A Senior Secured Notes due 2023 were not issued.

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