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SHANGHAI - GDS Holdings Limited (NASDAQ: GDS; HKEX: 9698), a leading data center operator in China, has initiated a private offering of convertible senior notes with an aggregate principal amount of $450 million, maturing in 2032. The offering, aimed at qualified institutional buyers, may include an additional $50 million in notes subject to market conditions. According to InvestingPro data, the company maintains strong liquidity with a current ratio of 3.56, suggesting robust financial health to support this offering. Analysis from InvestingPro indicates the stock is currently trading below its Fair Value, presenting a potential opportunity for investors.
The company plans to allocate the net proceeds towards working capital and refinancing of existing debts, including its convertible bonds due in 2029. The notes, which are senior unsecured obligations, will be convertible under specific conditions and periods until their maturity date on June 1, 2032. The company’s financial position appears solid, with an Altman Z-Score of 12.68 indicating strong financial stability.
GDS Holdings also grants note holders the right to require the company to repurchase the notes on June 1, 2029, or in the event of significant corporate changes. The interest rate and initial conversion rate will be established at the time of the pricing of the notes.
In conjunction with the notes offering, GDS Holdings has announced a separate registered public offering of its American depositary shares (ADSs) and the lending of ADSs to facilitate privately negotiated derivative transactions to hedge investments in the notes.
The closing of the notes offering is interdependent with the closing of the ADS offerings. If the notes offering does not proceed, the ADS offerings will also be terminated. The notes, the ADSs potentially issued upon conversion, and the underlying Class A ordinary shares have not been registered under the Securities Act of 1933 and are available only to certain institutional buyers.
This strategic financial move is part of GDS Holdings’ broader efforts to support its growth and service delivery in China’s high-performance data center market, serving a customer base that includes cloud service providers, large internet companies, and multinational corporations.
The information in this article is based on a press release statement from GDS Holdings Limited.
In other recent news, GDS Holdings Limited has announced a public offering of 5.2 million American Depositary Shares (ADSs), with an option for underwriters to purchase an additional 780,000 ADSs. Concurrently, the company is offering $450 million in convertible senior notes due 2032, with an option for initial purchasers to acquire an additional $50 million of the notes. The proceeds from the ADS offering are intended for general corporate purposes, working capital, and refinancing existing debt, including the potential repurchase or redemption of convertible bonds due in 2029. However, GDS Holdings will not receive proceeds from a separate Delta Placement of Borrowed ADSs, which is meant to facilitate hedging for investors in the convertible notes. The offerings are interdependent, meaning the completion of each is contingent upon the others. If any offering is not completed, the others will be terminated. J.P. Morgan, BofA Securities, Morgan Stanley, and UBS Investment Bank are acting as joint book-running managers for the ADS offering. This financial strategy is part of GDS Holdings’ efforts to strengthen its position in the data center services market.
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