Luckin Coffee picks Houlihan Lokey for financial, strategic advice: sources

By Tom Arnold and Arno Schuetze

LONDON/FRANKFURT (Reuters) – Luckin Coffee has picked investment bank Houlihan Lokey as an adviser, according to sources close to the matter, following an accounting scandal that has seen the Chinese coffee chain’s shares plummet and creditors pursue assets held by the firm’s family.

Houlihan Lokey’s remit will be to provide financial and strategic advice, one source said.

A Cayman Islands court last week granted lenders, led by Credit Suisse, a court order to wind up Primus Investments Fund and Mayer Investments Fund, entities holding shares in Luckin Coffee and ultimately controlled by the family of the coffee firm’s Chairman Charles Zhengyao Lu.

The lenders are seeking to recover about $324 million of outstanding debt, according to a Cayman Islands court filing.

Luckin’s fortunes have crashed since an internal probe showed much of its 2019 sales was fabricated and overestimated by 2.2 billion yuan ($311.31 million).

Houlihan Lokey has experience with advising other companies in financial distress. It was last week appointed by troubled German tech firm Wirecard to assess its options and is advising the founder of United Arab Emirates-based hospital operator NMC Health .

Luckin Coffee and Houlihan Lokey were not immediately available for comment.

Nasdaq-listed Luckin Coffee’s shares fell 11% on Monday after IFR reported shareholders will vote to oust Lu and other directors at an extraordinary general meeting on July 5. The stock, which was halted from April 7 to May 19, has lost around 85% of its value since the probe was revealed.

($1 = 7.0670 Chinese yuan renminbi)

(Additional reporting by Scott Murdoch in Hong Kong and Sophie Yu in Beijing; Editing by Ed Osmond)