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NEXTDC (ASX:NXT) share price hits record high on debt update

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The NEXTDC Ltd (ASX: NXT) share price is on the move on Monday following the release of an update.

At the time of writing, the data centre operator’s shares are up almost 3% to a new record high of $13.10.

What did NEXTDC announce?

This morning NEXTDC provided the market with an update on its debt facilities.

According to the release, the company has entered into a new Syndicated Facility Agreement with the likes of Credit Suisse, HSBC, National Australia Bank Ltd (ASX: NAB) and Natixis to arrange and underwrite $1.5 billion in senior debt facilities.

These senior debt facilities will be split across three tranches, each with a tenor of five years. They comprise an $800 million term loan facility, a $400 million capital expenditure facility, and a $300 million revolving multi-currency credit facility. 

Management notes that the new facilities provide a significant improvement in NEXTDC’s weighted average cost of debt and duration profile. They also come with materially improved financial covenants and flexibility.

NEXTDC intends to utilise the term loan facility to redeem all of its unsecured notes on issue at the next interest payment date of 9 December 2020.

The company’s CEO and Managing Director, Craig Scroggie, commented: “We are very pleased and encouraged by the support from our existing and new lending partners to the NEXTDC growth story. The new debt facilities provide NEXTDC with greater funding firepower as we continue to execute on our development pipeline in the coming years to satisfy growing customer demand.”

“We are grateful for the support provided by our fixed income investors to the Company through what was a critical phase of our growth. Our ability to achieve A$1.5 billion in Senior Debt Facilities is a testament to the maturity of the Company today,” Mr Scroggie added.

Is an international expansion coming?

No commentary was given on why NEXTDC has a $300 million revolving multi-currency credit facility.

But considering its existing operations are entirely in Australia, this could potentially be a sign that the company has its eyes on an international expansion in the near future.

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Returns as of 6th October 2020

Motley Fool contributor James Mickleboro owns shares of NEXTDC Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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