Luckin Coffee's battered stock faced a renewed wave of selling yesterday after Nasdaq said it planned to delist the onetime market darling that last month shocked investors with revelations of accounting fraud.
The Chinese coffee chain's shares, which had been suspended since tumbling more than 80 percent in early April, dived 36 percent to US$2.8 (HK$21.84) as of 9 40 pm yesterday, after trading resumed in New York. It had reached as high as US$51.3 at its peak in January.
Luckin announced Nasdaq's intention to delist the company on Tuesday, but it also said shares would remain on the exchange pending the outcome of an appeal.
The prospect of delisting is likely to trigger a rush for the exit by Luckin's remaining shareholders, adding to a long list of challenges for the company as it tries to recover from its disclosure that senior executives fabricated about US$310 million in sales. Banks including Credit Suisse, Morgan Stanley and Goldman Sachs are among those with funds at stake.
The firms seized control of shares that Luckin's chairman had pledged as collateral for loans.
Meanwhile, a company linked to Luckin Coffee is understood to be seeking fresh capital, highlighting the ripple effect of the accounting fraud.
UCAR, founded by Charles Zhengyao Lu, is looking to sell its limited partner interest worth 1 billion yuan (HK$1.09 billion) in Chinese private equity firm Centurium Capital's yuan fund.
Elsewhere, The US Treasury Department sanctioned a Shanghai-based company it alleged had acted as an agent for an Iranian airline it accused of transporting weapons and other material for the country's military and militant groups.
Treasury officials claimed Shanghai Saint Logistics provided administration services for Mahan Air.
That made it the seventh company the Treasury Department has sanctioned as an agent of Mahan Air.