Luckin Coffee Enters into Restructuring Support Agreement with Holders of a Majority of Existing Notes to Restructure Indebtedness and Enhance Capital Structure - Seite 2

Transactions Contemplated in the RSA

As described in more detail and subject to the terms therein, the RSA contemplates, among other things, that the holders of the Existing Notes shall receive, on or after the effective date of the Restructuring, for each $1,000 principal amount and accrued and unpaid interest of the Existing Notes:

• Cash in an amount of $320, representing a recovery of 32% of par (the “Cash Consideration”);
• $230 principal amount of 9.00% One-Year Senior Secured Notes (the “New Notes A”), representing a recovery of 23% of par;³
• $300 principal amount of 9.00% Five-Year Senior Secured Notes (the “New Notes B”), representing a recovery of 30% of par;
• A number of American Depository Shares of Luckin Coffee (“ADSs”) valued at $60, representing 6% of par; and
• if Luckin Coffee is able to raise equity in the amount of $50 million or more prior to the effective date of the Restructuring, then each holder of Existing Notes will have the option (the “Equity Conversion Option”) to elect to replace up to $100 principal amount of New Notes A per $230 principal amount of New Notes A (such principal amount elected, the “Equity Conversion Amount”) with ADSs, or if ADSs are not available, New Notes B and/or cash, subject to a top-up mechanism that guarantees a recovery of 150% on the Equity Conversion Amount, representing an additional recovery of up to 5% of par.⁴
  

Luckin Coffee expects to implement the Restructuring through a scheme of arrangement in respect of the Existing Notes (the “Scheme”) pursuant to section 86 of the Companies Act (2021 Revision) (the “Companies Act”) of the Cayman Islands.⁵ The RSA provides that the Scheme must be approved in the Cayman Court and then enforced in the United States under chapter 15 of the U.S. Bankruptcy Code.⁶

RSA Timeline

As further detailed in the RSA, the RSA will be effective and binding upon the Company and the Restricted Group until the earlier of: (i) the implementation of the Restructuring following its approval in the Cayman Court and enforcement in the U.S. Bankruptcy Court and (ii) December 31, 2021 (the “RSA Long-Stop Date”); provided that the Company and the JPLs may extend the RSA Long-Stop Date (i) for a period of up to 30 days, unless the Majority Ad Hoc Group (as defined in the RSA) objects to such extension and provides 5 business days’ prior written notice of such objection to the Company and the JPLs and (ii) until such later time as agreed in writing between the Company, the JPLs and the Majority Ad Hoc Group.