Nasdaq informs China's Luckin Coffee it plans to delist it (updated)

Luckin Coffee

19/05/2020 14:57

(Recasts with announcement, background)
    By Julie Zhu and Echo Wang
    HONG KONG/NEW YORK, May 19 (Reuters) - Luckin Coffee Inc
 LK.O  said on Tuesday that Nasdaq Inc  NDAQ.O  has given it
notice that it plans to delist it from the  U.S. stock exchange
a month after the Chinese coffee chain disclosed that some of
its employees fabricated sales accounts.
    The move underscores Nasdaq's renewed focus on the auditing
standards of companies on its bourse. This week it tightened its
listings rules with an eye to curbing initial public offerings
(IPOs) of Chinese companies that are closely held by insiders
and are not transparent about their accounting, Reuters reported
on Monday.  urn:newsml:reuters.com:*:nL1N2D100Y
    Luckin said in early April that as much as 2.2 billion yuan
($310 million) in sales last year were fabricated by its chief
operating officer Jian Liu and other staff, who had been
suspended while the company carried out its investigation.
 urn:newsml:reuters.com:*:nL4N2BQ34P  urn:newsml:reuters.com:*:nL4N2CU3FK
    The falsified numbers equate to about 40% of Luckin's annual
sales projected by analysts, according to Refinitiv IBES
data. urn:newsml:reuters.com:*:nL4N2BR218
    In its delisting notice, Nasdaq cited public interest
concerns raised by the fabricated transactions and Luckin's
failure to publicly disclose material information, the company
said, confirming an earlier Reuters report.
    Luckin plans to challenge the move before a Nasdaq hearing
panel, and will remain listed until this delivers an outcome,
most likely in the next two months, the company added.
    Founded in June 2017, Luckin, a rival to Starbucks  SBUX.O 
in China, had one of the most successful U.S. IPOs by a Chinese
company last year, attracting interest from prominent U.S.
investors, including long-only funds and hedge funds.
    Luckin disclosed on May 12 that it had fired its chief
executive officer, Jenny Zhiya Qian, who had led the company
since November 2017, and Liu, who became COO in May 2018.
 urn:newsml:reuters.com:*:nL4N2CU3FK
    Shares of the Xiamen-headquartered company slumped more than
80% on April 2, the day the probe was revealed. Trading was
halted on April 7.
    Luckin has said it has been cooperating with and responding
to inquiries from regulatory agencies in both the United States
and China.  urn:newsml:reuters.com:*:nL4N2CU3FK

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
EXCLUSIVE-Nasdaq to tighten listing rules, restricting Chinese
IPOs -sources     urn:newsml:reuters.com:*:nL1N2D100Y
Luckin Coffee sacks CEO, COO for alleged fraud     urn:newsml:reuters.com:*:nL4N2CU3FK
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Julie Zhu in Hong Kong and Echo Wang in New York
Editing by Chizu Nomiyama and Will Dunham)
 ((Greg.Roumeliotis@thomsonreuters.com; +1 646 223 6022; Reuters
Messaging: greg.roumeliotis.thomsonreuters.com@reuters.net))