Goldman Sachs said it would seize and sell Luckin Coffee shares from the chairman of the scandal-hit chain after he defaulted on the terms of a $518 million margin loan, reported the Financial Times.
Luckin went public in New York last year with a lofty goal of displacing Starbucks in China but announced last week that its revenues had been manipulated, sending its shares down 80% since then.
Goldman on Monday said it was seizing the shares as collateral on the margin loan facility to Luckin chairman Lu Zhengyao. It would then convert them into American depositary shares and sell them to recoup losses on behalf of a syndicate of lenders.
The syndicate of lenders also included Credit Suisse, Morgan Stanley and Barclays, said two FT sources. After the value of shares and ADS fell sharply again on Monday, the stake claimed by Goldman would be worth about $350 million, implying a loss of about $168 million.