From Breakingviews: Corona Capital - Beijing is mad at Luckin Coffee and NMC Health’s novel coronavirus defense
BEIJING IS MAD AT LUCKIN COFFEE. Chinese watchdogs are looking into alleged fraud at the U.S.-listed company, which tried to challenge Starbucks in the People’s Republic. The virus hit sales, and now it looks like historic revenue was wildly inflated too. With shares down nearly 90% this year, short-selling China bears Muddy Waters and Kynikos Associates look smug. Likewise pleased, perhaps, is American Senator Marco Rubio, who wants to delist Chinese firms that don’t allow full U.S.
Beijing cannot be happy with Luckin’s founders Lu Zhengyao and Qian Zhiya. Investors are even dumping shares in Hong Kong-listed CAR, where Lu is chairman and Qian was once chief operating officer. Shares in other U.S.-listed Chinese firms could end up as collateral damage. Locals are rushing to use their Luckin coffee coupons while they are still honoured. Investigators have named the chief operating officer as the primary suspect. The buck might not stop there.
NMC HEALTH’S NOVEL CORONAVIRUS DEFENCE. The Abu Dhabi hospital operator – which last month said its debt was $6.6 billion, much of it previously undisclosed – hopes to make the best of a bad situation. Executive Chairman Faisal Belhoul is trying to avoid going into administration, arguing over the weekend that it could cause disruption to the company’s 200 hospitals and clinics at a time when it was playing an “important role” in the United Arab Emirate’s Covid-19 response.
Either way, the saga has infected NMC’s lenders. The UAE’s biggest banks have so far fessed up to owning around $2 billion of the debt pile, with the latest disclosures made on Sunday. That means a significant portion of the remaining debt could still be on European bank balance sheets just as they face the enormous task of keeping lockdown-hit companies afloat with cheap loans. Belhoul’s hopes that Covid-19 can be his company’s saviour will be cold comfort to NMC’s creditors.
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