Dow Stock News Today: Equity Futures Pave the Way for Another Explosive Rally

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The fall in the share price of Luckin Coffee leaves the lenders of the Chinese company with a bitter aftertaste.

A trust controlled by the president of Luckin (LK), Charles Zhengyao Lu, has defaulted on a $ 518 million margin loan, Goldman Sachs said in a statement on Monday.

The announcement came after the company revealed on Thursday that much of its 2019 sales were fake – a revelation that plunged its shares by 80% last week. According to Goldman, more than half a billion common shares held by Lu and Luckin, CEO of Jenny Zhiya Qian, were used as collateral for the loan. A group of lenders has now started converting these securities into Luckin’s 76.4 million US depository shares, which will go on sale.

Acting as a “divestiture agent,” Goldman helps sell the shares on the public markets or in private transactions. He did not disclose the identity of the lenders.

Luckin’s shares – once hailed as a rival to Starbucks (SBUX) – closed down 18% to $ 4.39 a share in New York on Monday after the news. At this closing price, the new shares for sale would amount to $ 335 million.

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