The article's wording is definitely imprecise. I agree with you there. Here's my interpretation: The share is held by a lender, who has sold the share to a short-seller. In effect, 17% of the shares are "double-counted".

If there are 1,000,000 total shares, but 17% short-interest, then there would be 1,170,000 shares in circulation. It seems clear to me that the article is talking about short-interest (but is using somewhat imprecise words at that).

So its not so much that the share is being "held by a short-seller", but the share is "double-counted because of a short seller". It probably would have been better if the article more precisely said "17% short interest", which is probably the precise and technical wording for this situation.