GDS Holdings Ltd. secured a US$150 million equity investment from Ping An Insurance (Group) Co. of China Ltd.'s China Ping An Insurance Overseas (Holdings) Ltd. subsidiary.
Convertible preferred shares comprising the equity investment will be subject to an at least 5% annual dividend during the first eight years from the issuance date as part of the investment agreement. The dividend, according to a news release, will be payable quarterly in arrears in cash or in the form of additional convertible preferred shares at the option of GDS Holdings.
The dividend for the shares will increase to an annual rate of 7.0%, minimum, on the eighth year. During this period, the dividend can only be paid in cash and the rate will further grow by 50 basis points for every quarter that the convertible preferred shares remain outstanding.
GDS Holdings added that it will have the option to trigger a mandatory conversion for the preferred shares beginning March 15, 2022, at a price equivalent to US$35.60 per American depositary shares.
The developer and operator of data centers in China said it will use the investment to finance the expansion of its data center capacity and for general corporate expenditures. The investment deal is expected to close within 10 business days, subject to certain customary and regulatory approvals.
GDS Holdings hired J.P. Morgan as its sole placement agent and Simpson Thatcher & Barlett LLP as its legal counsel. China Ping An, on the other hand, appointed DLA Piper LLP as legal counsel.