Chinese unicorn Luckin mortgages its coffeemakers for a $6.7 million loan (updated)

And they’re handing cash out to customers left and right.

Chinese startup Luckin Coffee has been granted a loan of RMB 45 million (USD 6.7 million) by Zhongguancun Science-Tech Leasing Company Limited, KrASIA’s parent company 36Kr reported on Tuesday, citing data from corporate information platform Tianyancha.com.

The company, which is valued at more than USD 2.2 billion and has recorded heavy losses, used its coffeemakers, milk containers, and coffee powder cartridges as collateral.

The coffee chain startup, which aims to usurp Starbucks’ status in China, is currently conducting a ten-week-long promotion campaign, in which its frequent customers will receive cash awards that add up to RMB 50 million (USD 7.5 million).

Reuters reported last month that the company’s non-executive chairman Lu Zhengyao is seeking a personal loan of at least USD 200 million from banks. The loan would be backed by Lu’s shares in Luckin, and would guarantee the banks’ involvement in the coffee chain’s upcoming IPO.

Luckin Coffee said that this is a normal financing move in line with the company’s hope to run on a light-asset mode, when contacted by online news portal qq.com.

The company added that using such the equipment financial vehicle will make sure the company can do full justice to the value of its current assets.

The story has been updated with Luckin coffee’s response. 

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