Luckin Coffee (OTCMKTS:LKNCY) stock is getting energized on Tuesday as the Chinese coffee chain announced plans to restructure its senior notes.
According to Luckin Coffee, it’s reached a restructuring support agreement (RSA) with holders representing a majority of its $460 million 0.75% Convertible Senior Notes that are due in 2025. These holders represent 59% of the existing notes.
The agreement will have Lickin Coffee restructuring its debt in such a way as to address its capital structure. The company says that this change should set it up for long-term success.
Luckin Coffee expects to reimburse holders of its senior notes in a variety of ways. That includes $320 in cash, “$230 principal amount of 9.00% One-Year Senior Secured Notes”. “$300 principal amount of 9.00% Five-Year Senior Secured Notes”, and a number of ADS for LKNCY stock valued at $60.
There’s also another condition of the RSA that LKNCY shareholders should note. If the company receives at least $50 million in funding before the RSA is complete, senior noteholders will also have the option of receiving a limited amount of ADS in place of new notes.
Dr. Jinyi Guo, chairman and CEO of Luckin Coffee, said this about the news sending LKNCY stock higher today.
“Today, we have a new leadership team and a viable plan to return Luckin Coffee to growth and value creation. The Board of Directors and management team believe that the Restructuring is in the best interests of the Company and its stakeholders. We will continue to take action to strengthen our capital structure while delivering outstanding products and services for our customers.”
LKNCY stock was seeing heavy trading on today’s news. As of this writing, more than 9 million shares of the stock have changed hands. For comparison, the stock’s daily average trading volume is 5.8 million shares.
LKNCY stock was up 50.2% as of Tuesday afternoon.
On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article.
