GDS Holdings Seeks Funding and Founder Control in Dual Moves

GDS Holdings Ltd US36165L1089

GDS Holdings Ltd is pursuing two significant corporate actions: securing fresh capital for expansion and proposing a substantial shift in its voting power structure. Shareholders are set to vote on a measure that could grant founder and CEO William Huang majority control of the company.

An extraordinary general meeting has been scheduled for February 24, 2026. The primary agenda item is a proposal to alter the voting rights attached to the company's Class B shares, which are held by CEO William Huang. The plan involves increasing the voting power per Class B share from the current 20 votes to 50 votes.

Should shareholders approve the change, Huang's total voting power is estimated to rise to approximately 58.6%. This would provide him with sole control over major shareholder decisions, marking a significant consolidation of influence at the top of the data center operator.

$300 Million Injection from Convertible Preferred Shares

In a parallel development, GDS Holdings has confirmed an agreement with Huatai Capital Investment Limited. The deal involves the issuance of Series B convertible preferred shares, raising $300 million in new capital.

The company intends to use the proceeds for capacity expansion and general corporate purposes. This financing method allows GDS to raise liquidity without immediately diluting existing common shareholders.

Key Terms of the Financing

• Instrument: Series B convertible preferred shares.
• Proceeds: $300 million.
• Investor: Huatai Capital Investment Limited.
• Dividend Rate: 3.75% per annum for the first six years, adjusting to 6.75% thereafter with additional quarterly step-ups.
• Conversion Price: Set at approximately $54.43 per American Depositary Share (ADS).
• Conversion Timeline: Conversion into ordinary shares is typically not permitted before March 31, 2027.
• Potential Dilution: Full conversion would dilute existing capital by an estimated 2.62%.

The conversion price represents a premium of roughly 17.5% over the closing share price prior to the announcement of the agreement.

Strategic Context for the Dual Initiatives

The substantial capital requirement stems from the competitive dynamics of the data center market. Massive upfront investments in physical infrastructure are necessary to meet demand driven by digital transformation and growing needs for artificial intelligence capacity.

By opting for convertible preferred shares, GDS secures funding at initially stable costs while deferring the potential issuance of new common stock. The concurrent move to consolidate voting control appears designed to ensure long-term strategic continuity under its founding leadership.

The outcome of the February 24 vote will reveal whether shareholders endorse this concentration of power to secure that strategic direction. Meanwhile, the $300 million capital infusion provides the liquidity needed to advance planned construction projects without delay.

@ boerse-global.de | US36165L1089 GDS