NEXTDC is positioning itself for its next growth phase, renegotiating and increasing its funding with NAB. It remains the highest bidder for Asia Pacific Data Centre Group
NEXTDC has announced a new three year $300m senior secured syndicated loan with its major lender, NAB. The facility will replace its existing $100m senior secured facility.
As detailed below, NEXTDC will have significant liquidity available including circa $300m of cash and $300m available under the new facility, which remains undrawn.
Source: FIIG Securities, Company reports. *According to APDC bidders' statement NEXTDC has cash of more than $300m as at 14 August 2017
NEXTDC is well funded to complete its second Sydney facility due in 2H18. The second Brisbane and Melbourne sites were practically completed in 2H17. Additional capex will then be spent to increase capacity as required.
The group is also bidding for the takeover of Asia Pacific Data Centre Group (ADJ). AJD’s only assets are three data centre properties occupied by NEXTDC under long term lease arrangements: Sydney (S1), Melbourne (M1) and Perth (P1).
NEXTDC acquired the land and constructed the buildings before selling these assets to ADJ under a sale and leaseback arrangement. NEXTDC retained ownership of the plant and equipment required to operate the data centres but sold the real estate assets to recycle capital to fund growth. It intends to retain ownership of its new centres.
NEXTDC is currently the highest bidder for ADJ with a $1.87 per security unconditional offer. The company already owns about 20% of the group, so this translates to total additional costs of circa $170m, plus transaction costs. The offer closes 15 September 2017.
We consider the reacquisition of these assets as broadly credit positive. It removes risks related to leasing infrastructure from a third party, which is unique and critical to NEXTDC’s operations. The assets can also be used as collateral (as illustrated by the increased NAB syndicated facility) if capital or liquidity is required.