NEXTDC Limited has launched an A$1.1 billion offering of convertible notes due 2031, representing a significant capital raising that reflects the company’s confidence in its data centre development pipeline and strategy to diversify funding sources.
The convertible notes carry an indicative cash coupon of 1.25% to 1.75% per annum, which is materially below both the weighted average cost of NEXTDC’s existing senior debt facilities and comparable subordinated debt alternatives. This represents an attractive funding cost for the company and reflects investor appetite for the structure. The notes will convert into ordinary shares at a premium of 32.5% to 37.5% to a reference share price, with final terms determined through a bookbuild expected to complete before ASX trading opens on 10 September 2026.
A key feature is the capped call transactions NEXTDC intends to enter, with an indicative cap price set at 70% over the reference share price. These transactions are designed to increase the effective conversion price and reduce the economic dilution that would otherwise occur to existing shareholders. The combination of a higher conversion premium and the capped call overlay provides downside protection on the dilution front while maintaining the capital-raising benefit for the company.
From an investor perspective, the structure makes strategic sense for NEXTDC. The company is accessing capital at a significantly lower cost than senior debt alternatives, which preserves capacity within its debt facilities for future needs. This maintains balance sheet flexibility to support continued growth in customer demand for data centre capacity. The proceeds will fund the next phase of NEXTDC’s Australian data centre development pipeline, with additional amounts directed to capped call transaction costs and general corporate purposes.
The notes rank as direct, unsecured and subordinated obligations, sitting junior to senior debt, equal with the A$750 million subordinated notes issued in April 2026, and senior to both hybrid securities and ordinary shares. NEXTDC has capped the number of ordinary shares issuable on conversion at 15% of shares on issue. The investor put option allows holders to require redemption at principal plus accrued interest after three years on 17 September 2029, providing downside protection while the company retains the benefit of five-year debt.
Completion of the bookbuild before the ASX open on 10 September represents a tight timetable, with settlement expected around 17 September 2026. Investors should monitor the bookbuild outcome to understand final coupon and conversion premium levels, and track how quickly the company deploys capital toward its development pipeline. This announcement has been flagged as price sensitive material by the ASX.
View the full ASX announcement (PDF)
About NEXTDC Limited (ASX: NXT)
NEXTDC Limited develops and operates data centers in Australia and the Asia-Pacific region. The company offers data center colocation solutions, high-performance computing, disaster recovery services, and various digital infrastructure solutions to enterprise clients, government agencies, and cloud providers. Headquartered in Brisbane, Australia, NEXTDC provides critical connectivity and infrastructure services across its network of facilities.
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