VNET Group, Inc.
The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed in the U.S. District Court for the Southern District of New York on behalf of those who acquired VNET Group, Inc. (“VNET” or the “Company”) (NASDAQ: VNET) securities during the period from April 8, 2022 through February 15, 2023, inclusive. Investors have until February 26, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
In August 2021, VNET’s co-founder, Josh Sheng Chen, and his companies entered into a $50.25 million margin loan facility with Bold Ally (Cayman) Limited, pledging all of his shares in GenTao Capital Limited and certain companies as collateral. Sheng Chen, GenTao, and their affiliates beneficially owned approximately 78.52 million VNET shares. On February 13, 2023, before the market opened, Bold Ally announced it would exercise its rights under the Facility Agreement following a default by GenTao and was entitled to 48,515,634 Class A ordinary shares (in the form of 8,085,939 American depositary shares) and 27,757,992 Class B ordinary shares of the Company. On this news, the price of VNET shares declined by $0.20 per share, or approximately 3.17%, from $6.31 to $6.11 per share on February 13, 2023.
The price of VNET shares continued to decline by $1.09 per share, or approximately 17.84%, from $6.11 to $5.02 per share on February 14, 2023.
Then, on February 15, 2023, VNET disclosed that the board of directors had approved and authorized the issuance of up to 555,000 newly created Class D ordinary shares to the Executive Chairman of the Board, and that these shares would be granted a 500-to-1 vote per share power. The Company stated this measure was required in order to “protect the Company’s interests and continued stability.” On this news, the price of VNET shares declined by $0.10 per share, or approximately 2%, from $5.02 to close at $4.92 per share on February 15, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (ii) as a result, there was a substantial likelihood that Bold Ally would acquire Defendant Sheng Chen’s significant ownership stake in VNET; (iii) to restore Defendant Sheng Chen’s voting interest in VNET, the Company would issue newly created shares to Defendant Sheng Chen, diluting investors’ interest; and (iv) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
In August 2021, VNET’s co-founder, Josh Sheng Chen, and his companies entered into a $50.25 million margin loan facility with Bold Ally (Cayman) Limited, pledging all of his shares in GenTao Capital Limited and certain companies as collateral. Sheng Chen, GenTao, and their affiliates beneficially owned approximately 78.52 million VNET shares. On February 13, 2023, before the market opened, Bold Ally announced it would exercise its rights under the Facility Agreement following a default by GenTao and was entitled to 48,515,634 Class A ordinary shares (in the form of 8,085,939 American depositary shares) and 27,757,992 Class B ordinary shares of the Company. On this news, the price of VNET shares declined by $0.20 per share, or approximately 3.17%, from $6.31 to $6.11 per share on February 13, 2023.
The price of VNET shares continued to decline by $1.09 per share, or approximately 17.84%, from $6.11 to $5.02 per share on February 14, 2023.
Then, on February 15, 2023, VNET disclosed that the board of directors had approved and authorized the issuance of up to 555,000 newly created Class D ordinary shares to the Executive Chairman of the Board, and that these shares would be granted a 500-to-1 vote per share power. The Company stated this measure was required in order to “protect the Company’s interests and continued stability.” On this news, the price of VNET shares declined by $0.10 per share, or approximately 2%, from $5.02 to close at $4.92 per share on February 15, 2023.
The lawsuit alleges that, throughout the Class Period, Defendants made false and/or misleading statements, as well as failed to disclose that: (i) GenTao was experiencing financial difficulties and was at risk of defaulting on the Facility Agreement; (ii) as a result, there was a substantial likelihood that Bold Ally would acquire Defendant Sheng Chen’s significant ownership stake in VNET; (iii) to restore Defendant Sheng Chen’s voting interest in VNET, the Company would issue newly created shares to Defendant Sheng Chen, diluting investors’ interest; and (iv) as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.