Luckin Coffee is preparing to relist its shares in the United States, its co-founder and CEO Jinyi Guo said at a business meeting earlier this month, five years after a $300 million accounting scandal derailed the coffee chain’s business. Speaking at a government-hosted event in the southeastern city of Xiamen, where Luckin Coffee is based, Guo said that “under the direction of the municipal government, we are actively pushing the process of relisting on a major US board,” according to CNBC’s translation of his Mandarin speech published by a Xiamen government-backed industry and trade group. The reintegration process, once completed, would help promote Xiamen’s reputation as an attractive location for global business and investment, Guo added, while acknowledging the government’s support for Luckin’s turnaround. However, Guo did not provide details on the company’s progress toward its new listing. In an emailed statement to CNBC, a company spokesperson said Luckin Coffee “remains committed to the U.S. capital markets, although we do not have a clear timeline for returning to main board trading.” “Our current priority is to focus on strategy execution, concentrate on business operations and development, and enhance our brand influence and market competitiveness,” the company said. Luckin was delisted from the Nasdaq stock exchange in June 2020 after revelations that the coffee chain had made more than $310 million in revenue for 2019. Six months later, Luckin agreed to pay a $180 million fine to resolve accounting fraud charges with the U.S. Securities and Exchange Commission. Guo took over as new CEO in 2020, following the ouster of co-founder and former chairman Charles Zhengyao Lu following an internal fraud investigation. In 2022, Luckin announced that it had completed the restructuring of its financial debt and emerged from Chapter 15 bankruptcy proceedings. Its shares have continued to trade over the counter in the US since its delisting, giving the company a market valuation of approximately $10.9 billion as of Tuesday evening. For comparison, Starbucks’ operations in China were recently valued at $4 billion on a cash- and debt-free basis, excluding Starbucks’ licenses to its brand and intellectual property. Once on the brink of collapse, the coffee chain has staged an extraordinary comeback, with its budget drinks attracting increasing numbers of customers, overtaking Starbucks as China’s largest coffee retailer by 2023. Luckin has also taken on Starbucks on its own turf, opening two new stores in New York City in July this year. The move was bolstered by backing from private equity fund Centurium Capital, its largest shareholder, which doubled its investment following the 2020 scandal to help Luckin cover mounting legal fees and fines, and installed its own team to revamp the business. In April of this year, David Li, founder of Centurium Capital, became president of the company, a move that some in the industry saw as a sign of Luckin’s plans to accelerate its relisting in the U.S. As early as 2022, media reports emerged that the coffee chain was planning to relist on the Nasdaq. However, the company had refuted the reports, with Guo most recently stating in an investor call in October last year that Luckin had no clear timeline for a listing. Any new overseas listing of a Chinese company must now file with the China Securities Regulatory Commission under rules that take effect in 2023. It is unclear whether Luckin has approached the regulator about its plan to relist in the U.S. Luckin could also face regulatory hurdles in meeting the U.S. SEC’s financial disclosure requirements. Public Company Accounting (PCAOB). In July, the PCAOB permanently revoked the license of Centurion ZD CPA & Co., Luckin Coffee’s former auditor, for violating auditing rules for companies operating in China. Regulators said the company failed to identify and assess fraud risks in Luckin’s 2021 financial reports. Luckin has hired BDO China Shu Lun Pan Certified Public Accountants LLP as its auditor since 2022, according to company filings. Centurium Capital and the China Securities Regulatory Commission did not immediately respond to CNBC’s requests for comment. In the second quarter of this year, Luckin’s revenue rose 47.1% from a year earlier to $1.7 billion, according to its filing, with 26,206 stores worldwide as of the end of June. — CNBC’s Evelyn Cheng contributed to this report.
Luckin Coffee eyes US going public again as five-year turnaround takes hold after fraud scandal
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