By Jing Yang
Banks stand to lose more than $100 million from a loan they made to the chairman of Luckin Coffee Inc. , whose share price plunged after the Chinese coffee chain last week said much of its 2019 sales were fabricated.
On Monday, Goldman Sachs Group Inc. /zigman2/quotes/209237603/composite GS +2.71% said an entity controlled by Luckin Chairman Charles Zhengyao Lu defaulted on a $518 million margin loan facility. It said a group of lenders is putting 76.3 million of the Chinese company’s American depositary shares — representing the collateral for the loan — up for sale.
Goldman said it is acting as a “disposal agent” for the lenders, meaning it is helping to facilitate the share sale in one or more transactions. The identities of the lenders wasn’t disclosed, and a Goldman spokeswoman declined to say if the investment bank was among them.
The securities pledged toward the loan are held by Lu and Jenny Zhiya Qian, Luckin’s chief executive officer. The two are co-founders of the company, which had quickly emerged as a rival to Starbucks Corp. /zigman2/quotes/207508890/composite SBUX +2.38% in China. The pledged shares were recently worth about $410 million, based on Luckin’s closing price of $5.38 per American depositary share on Friday.