GDS Announces Closing of Offering of American Depositary Shares in connection with the Delta Placement of Borrowed ADSs

Rhea-AI Summary

GDS Holdings announced the closing of multiple concurrent offerings: a Delta Placement of 6 million Borrowed ADSs at $24.50 per ADS, a convertible senior notes offering of $550 million due 2032 with 2.25% interest, and a Primary ADSs Offering of 5.98 million ADSs at $24.50 per ADS. The Borrowed ADSs were lent to an affiliate of the underwriter, who received all proceeds from their sale. GDS received only a nominal lending fee and believes the Borrowed ADSs won't affect earnings per ADS calculations. The ADS Borrower plans to use the short position to facilitate derivatives transactions related to the Notes. The Notes Offering included the full exercise of a $50 million option, while the Primary ADSs Offering included the complete exercise of an option for 780,000 additional ADSs.

Positive

• Successfully raised significant capital through multiple offerings totaling approximately $550 million in convertible notes
• Full exercise of additional options in both Notes Offering ($50M) and Primary ADSs Offering (780,000 ADSs) indicates strong demand
• Borrowed ADSs structure designed to prevent dilution in earnings per ADS calculations

Negative

• Complex offering structure may create market price volatility due to derivatives transactions
• Significant increase in company's debt through $550M convertible notes
• Potential future dilution risk from convertible notes if converted to equity

Insights

Capital Markets Specialist

GDS closed three concurrent financial transactions that improve liquidity without immediate ADS dilution, strengthening its capital structure for growth.

GDS has successfully completed a complex, multi-part capital raising transaction that merits careful unpacking. The company executed three interconnected offerings: (1) a Delta Placement of 6 million borrowed ADSs at $24.50 per ADS, (2) a Notes Offering of $550 million in convertible senior notes due 2032 with a 2.25% interest rate, and (3) a Primary ADS Offering of approximately 6 million additional ADSs at the same $24.50 price point.

The Delta Placement structure is particularly noteworthy as it generated no proceeds for GDS and created no immediate dilution. Instead, the borrowed ADSs were lent to an affiliate of the underwriter (likely for hedging activities related to the convertible notes). This sophisticated structure allows the company to support the convertible notes offering without immediately increasing its share count for earnings calculations.

For the Primary ADS Offering, GDS placed nearly 6 million new ADSs, which would generate approximately $146.5 million in gross proceeds before underwriting fees. Combined with the $550 million from the convertible notes (which includes the full exercise of the $50 million overallotment option), GDS has raised nearly $700 million in new capital.

This substantial capital raise demonstrates strong investor confidence in GDS's business model and growth trajectory in China's data center market. The full exercise of overallotment options in both the notes and primary ADS offerings indicates robust demand. The company's ability to secure this funding will likely enhance its capacity to develop new data centers and capitalize on the growing demand for high-performance computing infrastructure in China.

SHANGHAI, China, May 30, 2025 (GLOBE NEWSWIRE) -- GDS Holdings Limited (“GDS Holdings”, “GDS” or the “Company”) (NASDAQ: GDS; HKEX: 9698), a leading developer and operator of high-performance data centers in China, today announced the closing of a previously announced registered public offering of 6,000,000 American Depositary Shares (“ADSs”), each representing eight Class A ordinary shares, par value US$0.00005 per share (the “Delta Placement of Borrowed ADSs”), at a public offering price of US$24.50 per ADS (the “Delta Public Offering Price”), which the Company lent (such loaned ADSs, the “Borrowed ADSs”) to an affiliate of the underwriter in the ADS offering (such affiliate, the “ADS Borrower”) pursuant to an ADS lending agreement with the ADS Borrower (the “ADS Lending Agreement”).

The ADS Borrower or its affiliate received all of the proceeds from the sale of the Borrowed ADSs. The Company did not receive any proceeds from the Delta Placement of Borrowed ADSs but received from the ADS Borrower a nominal lending fee, which was applied to fully pay up the Class A ordinary shares underlying the Borrowed ADSs. The Company believes that the Borrowed ADSs will not be considered outstanding for the purpose of computing and reporting its earnings per ADS under the current U.S. Generally Accepted Accounting Principles and, therefore, the Company believes that no dilution will occur as a result of the Borrowed ADSs.

The Borrowed ADSs were sold concurrently with the pricing of the Notes Offering (as defined below) and the Primary ADSs Offering (as defined below). The Company was informed by the ADS Borrower that it or its affiliates intends to use the short position resulting from the Delta Placement of the Borrowed ADSs to facilitate privately negotiated derivatives transactions related to the Notes. The activity described above could affect the market price of the Company’s ADSs or the Notes otherwise prevailing at that time.

The Company also announced today by separate press release the closing of an offering of 2.25% convertible senior notes in an aggregate principal amount of US$550 million due 2032 (the “Notes”) in a private offering to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”), which amount reflects the exercise in full by the initial purchasers of their option to purchase an additional US$50 million in aggregate principal amount of the Notes (collectively, the “Notes Offering”).

The Company also announced today by separate press release the closing of a separate registered public offering (the “Primary ADSs Offering”) of 5,980,000 ADSs (the “Primary ADSs”), at a public offering price of US$24.50 per ADS (which is the same public offering price as the Delta Public Offering Price), and reflecting the exercise in full by the underwriters in the Primary ADSs Offering of their option to purchase 780,000 additional Primary ADSs.

Nothing contained herein shall constitute an offer to sell or the solicitation of an offer to buy any securities, including the Borrowed ADSs, the Notes or the Primary ADSs, nor shall there be any offer or sale of the securities in any state or jurisdiction in which such offer, solicitation or sale would be unlawful. The Delta Placement of Borrowed ADSs and the Primary ADSs Offering were made only by means of separate prospectus supplements and accompanying prospectuses pursuant to an effective registration statement filed with the U.S. Securities and Exchange Commission (the “SEC”).

The Company filed an automatic shelf registration statement on Form F-3 with the SEC. A preliminary prospectus supplement and the accompanying prospectus describing the terms of the Delta Placement of Borrowed ADSs were filed with the SEC. The prospectus supplement for the Delta Placement of Borrowed ADSs was filed with the SEC. The Delta Placement of Borrowed ADSs was made only by means of the prospectus supplement and accompanying prospectus. You may obtain these documents free of charge by visiting EDGAR on the SEC website at www.sec.gov. Copies of the prospectus supplement and the accompanying prospectus may be obtained by contacting J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717, or by telephone at 866-803-9204 or by email at prospectus-eq_fi@jpmchase.com.

About GDS Holdings Limited

GDS Holdings Limited (NASDAQ: GDS; HKEX: 9698) is a leading developer and operator of high-performance data centers in China. The Company’s facilities are strategically located in and around primary economic hubs where demand for high-performance data center services is concentrated. The Company’s data centers have large net floor area, high power capacity, density and efficiency, and multiple redundancies across all critical systems. GDS is carrier and cloud-neutral, which enables its customers to access the major telecommunications networks, as well as the largest PRC and global public clouds, which are hosted in many of its facilities. The Company offers co-location and a suite of value-added services, including managed hybrid cloud services through direct private connection to leading public clouds, managed network services, and, where required, the resale of public cloud services. The Company has a 24-year track record of service delivery, successfully fulfilling the requirements of some of the largest and most demanding customers for outsourced data center services in China. The Company’s customer base consists predominantly of hyperscale cloud service providers, large internet companies, financial institutions, telecommunications carriers, IT service providers, and large domestic private sector and multinational corporations. The Company also holds a non-controlling 35.6% equity interest in Day One Data Centers Limited which develops and operates data centers in International markets.

Safe Harbor Statement

This announcement contains forward-looking statements. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements can be identified by terminology such as “aim,” “anticipate,” “believe,” “continue,” “estimate,” “expect,” “future,” “guidance,” “intend,” “is/are likely to,” “may,” “ongoing,” “plan,” “potential,” “target,” “will,” and similar statements. Among other things, statements that are not historical facts, including statements about GDS Holdings’ beliefs and expectations regarding the Notes Offering, Delta Placement of Borrowed ADSs and the Primary ADSs Offering, the growth of its businesses and its revenue for the full fiscal year, the business outlook and quotations from management in this announcement, as well as GDS Holdings’ strategic and operational plans, are or contain forward-looking statements. GDS Holdings may also make written or oral forward-looking statements in its periodic reports to the SEC on Forms 20-F and 6-K, in its current, interim and annual reports to shareholders, in announcements, circulars or other publications made on the website of the Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), in press releases and other written materials and in oral statements made by its officers, directors or employees to third parties. Forward-looking statements involve inherent risks and uncertainties. A number of factors could cause GDS Holdings’ actual results or financial performance to differ materially from those contained in any forward-looking statement, including but not limited to the following: GDS Holdings’ goals and strategies; GDS Holdings’ future business development, financial condition and results of operations; the expected growth of the market for high-performance data centers, data center solutions and related services in China and regions in which GDS’ major equity investees operate, such as South East Asia; GDS Holdings’ expectations regarding demand for and market acceptance of its high-performance data centers, data center solutions and related services; GDS Holdings’ expectations regarding building, strengthening and maintaining its relationships with new and existing customers; the results of operations, growth prospects, financial condition, regulatory environment, competitive landscape and other uncertainties associated with the business and operations of our significant equity investee DayOne; the continued adoption of cloud computing and cloud service providers in China and other major markets that may impact the results of our equity investees, such as South East Asia; risks and uncertainties associated with increased investments in GDS Holdings’ business and new data center initiatives; risks and uncertainties associated with strategic acquisitions and investments; GDS Holdings’ ability to maintain or grow its revenue or business; fluctuations in GDS Holdings’ operating results; changes in laws, regulations and regulatory environment that affect GDS Holdings’ business operations and those of its major equity investees; competition in GDS Holdings’ industry in China and in markets that affect the business of our major equity investees, such as South East Asia; security breaches; power outages; and fluctuations in general economic and business conditions in China and globally, and assumptions underlying or related to any of the foregoing. Further information regarding these and other risks, uncertainties or factors is included in GDS Holdings’ filings with the SEC, including its annual report on Form 20-F, and with the Hong Kong Stock Exchange. All information provided in this press release is as of the date of this press release and are based on assumptions that GDS Holdings believes to be reasonable as of such date, and GDS Holdings does not undertake any obligation to update any forward-looking statement, except as required under applicable law.

For investor and media inquiries, please contact:

GDS Holdings Limited
Laura Chen
Phone: +86 (21) 2029-2203
Email: ir@gds-services.com

Piacente Financial Communications
Ross Warner
Phone: +86 (10) 6508-0677
Email: GDS@tpg-ir.com

Brandi Piacente
Phone: +1 (212) 481-2050
Email: GDS@tpg-ir.com

GDS Holdings Limited

FAQ

What is the total size of GDS Holdings' convertible notes offering in 2025?

GDS Holdings' convertible notes offering totals US$550 million, including the full exercise of a US$50 million option, with 2.25% interest rate due 2032.

How many ADSs did GDS Holdings offer in their Primary ADS Offering?

GDS Holdings offered 5,980,000 ADSs in their Primary ADS Offering, which includes the full exercise of the underwriters' option to purchase 780,000 additional ADSs.

What is the price per ADS in GDS Holdings' 2025 offerings?

The price per ADS was US$24.50 for both the Delta Placement of Borrowed ADSs and the Primary ADSs Offering.

Will the Borrowed ADSs cause dilution to GDS Holdings' earnings per share?

According to GDS, the Borrowed ADSs will not be considered outstanding for earnings per ADS calculations under U.S. GAAP, and therefore should not cause dilution.

How many ADSs were included in GDS Holdings' Delta Placement of Borrowed ADSs?

The Delta Placement included 6,000,000 Borrowed ADSs, with each ADS representing eight Class A ordinary shares.