GDS Prices Offering of American Depositary Shares in connection with the Delta Placement of Borrowed ADSs | GDS Stock News

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May 28, 2025
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  • GDS Holdings (GDS, Financial) initiates multiple concurrent offerings, including a $500 million convertible senior notes offering, indicating strong investor interest.
  • The company is employing a Delta Placement of 6 million Borrowed ADSs at $24.50 per ADS, designed to minimize dilution.
  • Total capital raised from offerings, including 5.2 million Primary ADSs, amounts to approximately $627.4 million.

GDS Holdings Limited (GDS), a key player in the high-performance data center industry in China, has announced the pricing of several interlinked financial offerings. Central to these is a $500 million convertible senior notes offering due 2032, which has been upsized from the initial $450 million, reflecting robust market demand. These notes carry an interest rate of 2.25%, with an optional increase of an additional $50 million.

Concurrently, GDS is executing a primary offering of 5.2 million American Depositary Shares (ADS) at $24.50 per ADS, raising about $127.4 million. This primary offering includes a 30-day option to purchase up to 780,000 additional ADSs, further maximizing potential capital.

The company is also using a Delta Placement strategy, involving 6 million Borrowed ADSs at the same price of $24.50 per ADS. These Borrowed ADSs are structured to avoid immediate dilution for existing shareholders as they will not be considered outstanding for earnings per ADS calculations under current U.S. GAAP standards. The proceeds from this part of the offering will go to the underwriter's affiliate, not GDS, although the company will receive a nominal lending fee.

The overall capital injection of approximately $627.4 million strengthens GDS's financial position as it expands its data center operations. However, the complex structure of these offerings, which are all contingent on each other's completion, could introduce market volatility and potential future dilution if the convertible notes are turned into equity.

This interlinked structure reflects GDS's strategy to optimize its cost of capital while limiting market impact, as it continues to solidify its leading position in the data center services market in China.

Disclosures

I/We may personally own shares in some of the companies mentioned above. However, those positions are not material to either the company or to my/our portfolios.