Battered by missteps and bad news of late, it seems Luckin Coffee (LKNC.Y 2.65%) is turning to a third party for some help. Reuters is reporting that the Chinese takeout java specialist has hired Los Angeles-based investment bank Houlihan Lokey (HLI 5.86%) as an advisor.
The article, citing "sources close to the matter," states that Houlihan Lokey will provide strategic and financial advice for Luckin Coffee. It was not clear how much the Asian company will be paying for such services.
Rocked by several scandals involving alleged accounting fraud and loan defaults by some of its top executives, the onetime investor favorite has seen its market value plunge lately.
Luckin Coffee's most recent headache is the real threat its stock will be delisted; earlier on Tuesday Nasdaq sent its second notice on the matter. It cited the company's failure to file its 2019 annual report as grounds for delisting. Addressing that matter, Luckin Coffee said the delay was due to the COVID-19 pandemic, and an ongoing internal investigation into that accounting scandal.
Houlihan Lokey, a veteran in the financial services space, does a brisk business advising not only companies, but also government organizations. It has particular experience advising entities that are in bad financial straits.
Neither Luckin Coffee nor Houlihan Lokey has yet commented on the Reuters article.
On Tuesday, in sharp contrast to the gains enjoyed by the broader stock market and numerous fellow consumer goods stocks, Luckin Coffee shares dived by more than 12%. Houlihan Lokey declined marginally on the day.