China Times (chinatimes.net.cn) reporter Lu Xiao reported in Beijing
Although it will be voted down again in two days. But whether to depose himself or let others decide his fate is obviously not the same thing for Lu Zhengyao, chairman of Luckin Coffee.
In the early morning of July 3, Luckin Coffee's announcement to the U.S. Securities and Exchange Commission (SEC) showed that the proposal to remove Lu Zhengyao failed to receive no less than 2/3 of the votes in favor of the board of directors on July 2, and Lu Zhengyao will still serve as the director and chairman of Luckin Coffee.
It seems that Lu Zhengyao won the first round of the clash of Luckin Coffee's board of directors. But whether Lu Zhengyao can decide on Luckin's board of directors will depend on the extraordinary shareholders' meeting held on July 5.
First round win
Luckin Coffee mentioned in its July 1 announcement that most of its directors had requested Lu Zhengyao's removal. This means that after Mr. Luk's recusal, at least four of the seven directors agreed to hold a July 2 vote on whether to remove Mr. Lu's board.
At present, independent directors and outside directors representing investors are regarded as staunch "land-shifters".
Among them, the contradiction between Lu Zhengyao's side and the independent directors has been made public. On July 1, Luckin Coffee announced that the proposal to remove Lu Zhengyao was made by the special committee based on the evidence found in its internal investigation and the assessment of the extent of Lu Zhengyao's cooperation in the internal investigation.
The board also recommended that shareholders vote against Lu Zhengyao's proposal to remove independent director Sean Shao at the extraordinary general meeting on July 5, "because considering that Mr. Shao is currently the chairman of the special committee of the board, the current internal investigation may be disrupted." ”
Luckin Coffee announced the preliminary results of the investigation on July 1. The special committee found that Luckin Coffee's forgery transactions had begun in April 2019, and that Luckin Coffee's net income in 2019 was exaggerated by about 2.12 billion yuan, and costs and expenses were exaggerated by about 1.34 billion yuan. Luckin Coffee also announced that it is terminating its relationships with all third parties involved in the bogus transaction.
Li Hui, founder of Dapu Capital, representing the investor, and Liu Erhai, founding partner of Joy Capital, were also asked by Lu Zhengyao to withdraw from the board of directors of Luckin Coffee. Li Hui and Liu Erhai are rumored to be the "own people" who worked with Lu Zhengyao to promote the listing of Luckin Coffee. However, an insider close to Luckin Coffee previously told the "China Times" reporter that Li Hui and Liu Erhai did not participate in Luckin's fraud, "Investors have to raise other people's money, and how to play when the credibility is gone." ”
In April this year, the delisting of Luckin Coffee, which "blew itself up" with a false transaction of 2.2 billion yuan, is a foregone conclusion. Its share price is currently fixed at $1.38, a 90% drop from its $17 offering price. Investors suffer heavy losses. According to the "China Times" reporter, Dapu Capital has already cashed out some shares before, while Joy Capital has "not sold a share".
"Stubborn resistance" and "jumping ship early"
4 votes is not enough to "land" successfully. The proposal to remove Lu Zhengyao needs to get a lot of 2/3 of the votes in favor. Lawyer Zhao Zhanzhan told the "China Times" reporter that at least 6 people on the board of 8 members of Luckin Coffee need to agree to this proposal. In the case of Lu Zhengyao's avoidance, it also means that 5 people must agree.
At present, 3 directors from the management of Luckin Coffee are believed to be standing with Lu Zhengyao.
Among the three senior directors, Guo Jinyi, senior vice president and acting CEO of Luckin Coffee, served as the assistant to the chairman of UCAR from 2016 to 2017. Senior vice president Cao Wenbao and vice president Wu Gang joined the board after the withdrawal of former Luckin CEO Qian Zhiya and former COO Liu Jian in May this year. It should be mentioned that none of the three directors are on the list of luks to be removed.
Shen Meng, director of Chanson Capital, believes that Lu Zhengyao still has an important influence in the management of Luckin, "so although there are many oppositions at the board level of listed companies, they still firmly control luckin's system."
Chen Tao, a senior analyst at Analysys, believes that the current situation can only show that the three executives who stand with Lu Zhengyao have no special objections to the current operating conditions of Luckin Coffee. At the same time, he told the "China Times" reporter that from the perspective of investors, Luckin's fraud led to delisting from the US stock market, which will inevitably have a great impact on investors at the capital level and reputation level, "Investors may take this opportunity to transform Luckin."
Previously, the delisting of Luckin has become an important node in the outbreak of contradictions between the two sides. Some insiders told the "China Times" reporter that according to his understanding, investors and independent directors hope to let Luckin Coffee strive to stay in the US stock market through self-investigation and hearings. However, Lu Zhengyao's "group annihilation" dismissal method is considered to be one of the important reasons for Luckin Coffee to abandon the delisting hearing. Shen Meng also told the "China Times" reporter that Lu Zhengyao's side and the party that originally supported the self-exposure of counterfeiting have their own views, the former hopes to be stubborn and stubborn, and the latter hopes to jump ship as soon as possible, and their interests are different.
Where are the variables?
But whether Lu Zhengyao can fully influence the board of directors of Luckin Coffee will depend on the extraordinary shareholders' meeting held on July 5.
At the shareholders' meeting, in addition to proposing the removal of four directors, including Li Hui, Liu Erhai, Shao Xiaoheng and himself, Lu Zhengyao also announced the removal of newly elected directors from June 19 to the extraordinary shareholders' meeting in advance. In addition, Lu Zhengyao's side also nominated two independent directors. If the shareholders' meeting is approved, the original 1+3 structure of Lu Zhengyao and Luckin Coffee management in the board of directors will become 2+3.
As of May 11, Lu Zhengyao held a 25.75% stake in Luckin Coffee and had 29.98% of the voting rights. Lu Zhengyao's sister Sunying Wong holds a 9.72% stake in Luckin Coffee and has 12.17% voting rights. Qian Zhiya holds a 16.60% stake in Luckin Coffee and has 19.32% voting rights. This means that the Shenzhou Department currently holds a total of 52.81% of the shares of Luckin Coffee and 61.47% of the voting rights.
But the shares held by Lu Zhengyao are gradually decreasing as Credit Suisse and other syndicates collect debts. Just the day after the Extraordinary General Meeting, two more liquidation cases related to Luckin Coffee will be heard in the BVI courts. Perhaps the decision on the future direction of Luckin depends on where the votes in the hands of small and medium-sized shareholders will go on July 5.
Responsible Editor: Huang Xingli Editor-in-Chief: Han Feng