Data centre operator NEXTDC [ASX:NXT] has entered into a Syndicated Facility Agreement in relation to a new $400 million senior debt facility, pocketing this latest loan to fund ongoing incremental growth as and when the right opportunities arise.
Throughout FY22, the company was focused on building digital infrastructure, the very core of its business and the heart of its growth. It has been focused on heavily investing in people, processes, and tech to reach these goals.
The New Facility will lend the company stronger liquidity benefits of around $2.0 billion and boost its medium- and long-term growth.
NXT was climbing 2% earlier today, tracking an increase of 4.5% for the first two weeks of 2023.
Source: TradingView
NEXTDC secures extra funds in debt facility
To accelerate its growth over the long and medium term, NEXT declared it has entered into a Syndicated Facility Agreement for a full $400 in new funds to be accessed via a senior debt facility.
On a pro-forma basis, the New Facility will enable NEXT to gain liquidity approximating $2.0 billion — this includes the company’s existing cash of $464 million, as well as undrawn facilities of around $1.5 billion (as counted at the end of 2022).
NEXT already has a list of existing senior debt facilities which mature in December 2026; these consist of:
- A Term Loan Facility of $800 million
- A Capex Facility of $600 million
- Multi-Currency Revolving Facility of $800 million
- Term Loan Facility of $300 million
NEXT has already drawn $1.4 million from existing facilities, with $1.5 million not yet drawn, and has received lender approval to amend its existing finance package.
The same credit margins were used for the New Facility as the Amended Existing Facilities, in which HSBC and NAB acted as Mandated Lead Arrangers, Underwriters, and Bookrunners for all related financial programs.
Why does NEXT need all these funds?
As mentioned, NEXTDC is very much focused on its growth aspirations and is intent on accurately utilising the $1.9 billion liquidity flagged in 2022 to capitalise on investment opportunities that arise as the sector grows — though specifics were not exactly outlined.
‘We are living in extraordinary times – technology is pervasive and global data creation is about to explode’ said NEXTDC CEO Craig Scroggie at the company’s AGM in November.
‘According to Forbes, 90% of the world’s data was generated in the last two years with more than 2.5 quintillion bytes of data being created each day. We are in an information economy fuelled by data, the currency of our digital age.
‘With liquidity of approximately $1.9bn, the business has the flexibility to take advantage of value enhancing growth opportunities as they arise, as well as to continue to invest in the business, as the Company’s record sales pipeline continues to convert into contractual commitments.’
The company expects lower capital expenditure in FY23, forecasting $380–420 million.
Shareholders may be required to hold on for details as and when these mysterious growth opportunities might arise.
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