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Luckin gets another de-listing notice from Nasdaq, shares slump 18%

FILE PHOTO: A Luckin Coffee logo is seen at a closed store in Beijing, following the novel coronavirus disease (COVID-19) outbreak, China, April 16, 2020. REUTERS/Tingshu Wang/File Photo

(Reuters) - Luckin Coffee Inc disclosed on Tuesday that it received a de-listing notice from the Nasdaq Inc last week after it failed to file its annual report, sending the shares of the Chinese coffee chain down about 18%.

This is the second notice from the U.S. stock exchange. The previous one was issued in May, after the company announced a probe saying that a top executive fabricated and overestimated as much as 2.2 billion yuan ($311.5 million) in 2019 sales.

The latest reason cited by the Nasdaq is in addition to the two bases disclosed last month - public concerns raised by the fabricated transactions and the company’s failure to disclose material information.

The Chinese company, which competes with U.S. coffeehouse Starbucks, said the failure to file its annual report was due to delays caused by the COVID-19 pandemic and as it awaits the result of the internal probe. (bit.ly/3fQOMsZ)

The company will hold an extraordinary general meeting next month to vote on whether to oust several directors, including chairman Charles Zhengyao Lu.

Luckin’s shares have plunged more than 85% since April since the internal probe was announced and has resulted in the company defaulting on a loan secured by pledging millions of shares.

The shares were down at $2.6 in premarket trading after rising earlier in the day following a Reuters report that it picked investment bank Houlihan Lokey, also appointed by troubled German tech firm Wirecard, as an adviser.

($1 = 7.0635 Chinese yuan renminbi)

Reporting by Nivedita Balu in Bengaluru; Editing by Arun Koyyur

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