NEXTDC (ASX: NXT) – NEXTDC Maintains Covenant Compliance Headroom

NEXTDC has confirmed compliance with both its financial covenants as of 30 June 2026, with both metrics showing the company operating well within its debt restrictions. The interest cover ratio reached 5.91x on a pro forma basis, nearly four times the minimum 1.5x threshold, while the gearing ratio sat at 8.2%, substantially below the 60% maximum. The timing of this disclosure reflects NEXTDC’s navigation of near-term uncertainty around grid supply delays at its M3 Melbourne facility.

NEXTDC’s financial covenants exist within its senior debt agreements and apply specifically to the company’s Australian operations. The interest cover ratio measures how many times over the company’s earnings can service net interest expense, with a 1.5x minimum ensuring debt servicing remains sustainable. The gearing ratio compares net senior debt to total assets and is capped at 60%, constraining overall leverage. Both covenants are tested semi-annually on 30 June and 31 December, providing regular oversight of the company’s financial position.

The pro forma interest cover figure incorporates A$444 million in additional contracted EBITDA from 73 megawatts of contracted utilisation announced in July 2026, which the company expects to commence billing in the second half of FY27. Covenant EBITDA at 30 June totalled A$706 million on a pro forma basis, against net interest expense of A$119.5 million. This leaves A$526.8 million of headroom before the ICR would decline to the minimum 1.5x threshold, based on current contractual and utilisation assumptions.

NEXTDC has adopted a conservative stance regarding the M3 Melbourne power delays announced in late October. The company has excluded any contracted EBITDA from affected customer contracts at that facility from its covenant calculations, even though contracts are in place and set to deliver once grid supply increases, which are expected during FY28 and depend on infrastructure work by Jemena Electricity Networks. This approach means reported covenant headroom excludes revenue not yet visible in terms of billing timing.

NEXTDC’s liquidity position stood at A$8,675 million as at 30 September 2026, comprising A$1,275 million in cash and A$7,400 million in undrawn senior debt facilities and hybrid securities on a committed basis. This provides substantial capacity to fund capital expenditure and new customer deployment. Management notes that its ability to draw all undrawn facilities while remaining in compliance will depend on the timing of drawdowns relative to when billing from new contracts commences.

The next covenant test date falls on 31 December 2026, at which point NEXTDC expects to include the additional contracted utilisation announced in July if billing has commenced as forecast. Investors should monitor the actual timing of power deliveries at M3 Melbourne and management’s assessment of Contracted EBITDA in the December compliance report, as any delays would affect future covenant headroom. This announcement is price sensitive and has been flagged as 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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