On Tuesday evening, Luckin Coffee issued three announcements. The first was that the company had entered into a binding agreement to settle its US securities class action lawsuit with the lead plaintiffs. The second announcement consisted of a formal submission of a petition about the restructuring of Convertible Senior Notes to Cayman Court. The third announcement was the release of its 2020 annual report.
In regard to the settlement agreement, the company and all claims that have been or could be filed on behalf of a class of purchasers of the company’s ADS between May 17, 2019 through July 15, 2020 have now been reconciled. The agreement provides that the U.S. class action settlement amount will be calculated based on a global settlement amount of $187.5 million.
Guo Jinyi, Chairman of Luckin Coffee, commented on the matter, “Once finally approved, the agreement will resolve an important debt problem and enable Luckin Coffee to focus more on the implementation of its operations and strategic plans. We are working hard to reach a formal settlement agreement and obtain the court’s approval.”
Luckin Coffee said it has also filed a petition and summons for directions in the Cayman Court regarding a scheme of arrangement related to the restructuring of its $460 million 0.75% Convertible Senior Notes due 2025 proposed by the company and its joint provisional liquidators.
The company is also looking to convene a single meeting of affected creditors to consider and approve the arrangement with or without modification. “Through this announcement, we have taken another important step in the restructuring process,” said Guo.
At the same time, Luckin Coffee released its belated 2020 financial report. According to the report, its net income in 2020 was RMB 4,033.4 million ($618.1 million), an increase of 33.3% compared with 2019, which was achieved despite the impact of COVID-19 in 2020 and primarily driven by the increased average selling price for Luckin Coffee’s high-quality products.
As of December 31, 2020, the cumulative number of transacting customers was over 64.9 million, compared to 40.6 million as of December 31, 2019. Average monthly total items sold in self-operated stores and unmanned coffee machines were approximately 26.2 million in 2020, compared to 24.2 million in 2019. As of December 31, 2020, Luckin Coffee had operated 3,929 self-operated stores in 56 cities in China and operated 874 partnership stores.