Wall Street stuck with Luckin Coffee dregs

Haitong International Securities

07/04/2020 04:32

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are his own.)
    By Pete Sweeney
    HONG KONG, April 7 (Reuters Breakingviews) - Morgan Stanley,
Credit Suisse and others face big losses after the founder of
Starbuck’s Chinese rival defaulted on $518 mln of loans amid
fraud charges. The lenders are stuck offloading a huge stack of
share collateral in a falling market. It’s the price of blindly
chasing fees.       
    Full view will be published shortly.
    On Twitter https://twitter.com/petesweeneypro 
    
    CONTEXT NEWS
    - Luckin Coffee Chairman Lu Zhengyao and Chief Executive
Qian Zhiya have handed over shares in the embattled Chinese
coffee chain to banks after a company controlled by Lu's family
defaulted on $518 million in loans, Reuters reported on April 7.
The lenders include Goldman Sachs, Morgan Stanley, Credit
Suisse, Haitong, China International Capital Corp and Barclays,
sources told Reuters.
    - Luckin said on April 2 that much of its 2019 sales were
fabricated, sending shares plunging as much as 90% from a
January peak in U.S. trading and sparking an investigation by
China's securities regulator.
    -  For previous columns by the author, Reuters customers can
click on  SWEENEY/ 
    - SIGN UP FOR BREAKINGVIEWS EMAIL ALERTS: http://bit.ly/BVsubscribe

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Luckin Coffee chairman defaults on loan, surrenders company
shares     urn:newsml:reuters.com:*:nL1N2BU1A8
BREAKINGVIEWS-Luckin spills hot bezzle over credulous investors 
   urn:newsml:reuters.com:*:nL1N2BQ18Q
BREAKINGVIEWS-China fortune hard to read in Luckin Coffee beans 
   urn:newsml:reuters.com:*:nL4N2A50IA
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Editing by Robyn Mak and Jamie Lo)
 ((pete.sweeney@thomsonreuters.com; Reuters Messaging:
pete.sweeney.thomsonreuters.com@reuters.net))