NEXTDC TURNS ON 360 CAPITAL, INTENDS TO WIND UP DATA CENTRE TRUST
Written on the 14 December 2017 by David Simmons
THE ongoing feud between listed tech companies NEXTDC (ASX: NXT) and 360 Capital Group (ASX: TGP) has come to a head, with NEXTDC threatening to wind up the operations of Asia Pacific Data Centre Trust.
NEXTDC, which holds a 29.2 per cent interest in the Asia Pacific Data Centre Group (ASX: AJD), says it has "elevated concerns" about 360 Capital Group's ability to manage APDC.
The two companies have been engaged in an ongoing battle to takeover APDC throughout 2017, but 360 Capital outbid NEXTDC in the end.
NEXTDC is effectively a tenant of APDC, which owns three data centres in Sydney, Melbourne, and Perth, that house the storage for NEXTDC's operations.
NEXTDC backflipped when it called for an extraordinary general meeting of security holders in APDC with the objective of winding up the trust and distributing the net cash proceeds to all members.
The rationale behind the winding up of the trust flows from NEXTDC's belief that 360 Capital is making moves that are not in the best interests of all shareholders.
Specifically, NEXTDC cites 360 Capital's recent decision to proceed with a new debt facility of $100 million, provided by Bankwest and NAB.
In addition, NEXTDC is wary of 360 Capital's implementation of a capital distribution, which would see 360 Capital raise APDC's debt facility to $100 million, with the increased debt proceeds utilised for the purposes of funding a $0.65 per share capital distribution.
NEXTDC says the capital distribution is not in the best interest of all shareholders.
"The proposed capital distribution is not in the best interests of all security holders as it would increase APDC's debt to imprudent levels and thereby significantly elevate its risk profile, reducing both the quantum and value of future distributions and restrict APDC's ability to fund growth initiatives," says NEXTDC in an announcement to the ASX.
NEXTDC will look to convene a meeting of the trust early in the New Year to discuss the dissolution of the trust.
Shares in NEXTDC are up 0.09 per cent to $5.68 per share at 10.50am AEDT.
Business News Australia
Author: David Simmons