NEXTDC Locks in Record 250MW Capacity Surge at Western Sydney Data Centre
NEXTDC locks in record 250MW capacity surge at Western Sydney
NEXTDC has announced a transformational increase in contracted utilisation at its S4 Western Sydney facility, adding 250MW of capacity and taking pro forma contracted utilisation to 667MW as at 31 March 2026. The increase represents 60% growth since 31 December 2025 and positions the company to capture accelerating hyperscale and artificial intelligence demand across the Australian market.
The company’s pro forma Forward Order Book now stands at 544MW, up 83% over the same period. Management expects this contracted capacity to generate Contracted EBITDA in excess of A$1.0 billion from existing contracts alone — over four times the midpoint of FY26 EBITDA guidance of A$235 million. The step-change in contracted utilisation de-risks the S4 development by locking in revenue visibility ahead of potential joint venture partnerships from 2027.
CEO and Managing Director Craig Scroggie
“The scale of this increase in contracted utilisation and the resulting uplift in the Company’s pro forma Forward Order Book are unprecedented, underscoring the record levels of demand we continue to experience.”
The company disclosed that it is currently in discussions with various existing and potential customers at different stages of progression, suggesting further contract wins may be announced in due course.
When big ASX news breaks, our subscribers know first
Inside the A$2.2 billion capital plan funding the build-out
NEXTDC has structured a diversified funding package to support the accelerated S4 development and maintain balance sheet flexibility. The capital plan comprises three components:
- Entitlement Offer: A fully underwritten A$1.5 billion equity raise via a 1 for 5.4 pro-rata accelerated non-renounceable entitlement offer, priced at A$12.70 per share (an 8.6% discount to the theoretical ex-rights price of A$13.90)
- Hybrid Securities: A$1.7 billion in deeply subordinated hybrid securities, split between a A$1.0 billion Initial Series and a A$700 million Delayed Draw Series with a 12-month draw window
- Existing facilities: Undrawn senior debt capacity and cash on hand
La Caisse de dépôt et placement du Québec has increased its commitment to A$1.7 billion across both hybrid tranches, providing anchor support for the subordinated capital component. Following completion of these transactions, NEXTDC expects to have pro forma liquidity of approximately A$5.9 billion.
The diversified funding approach — equity, hybrid securities, and senior debt capacity — provides flexibility while keeping subordinated capital structures outside senior debt covenants. The hybrid securities sit junior to all existing and future debt obligations but senior only to ordinary shares, allowing the company to raise substantial capital without diluting existing shareholders to the same extent as pure equity.
What are hybrid securities and why does NEXTDC favour them?
Hybrid securities are instruments that combine characteristics of both debt and equity. They provide issuers with capital flexibility whilst offering investors fixed returns with features that differ from traditional bonds or shares.
For NEXTDC, the hybrid structure offers several advantages. The securities are expected to be tax-deductible and classified as debt for accounting purposes, yet sit outside the company’s senior debt covenants. This allows management to maintain financial headroom for additional senior debt capacity as Contracted EBITDA grows.
The hybrids carry a 100-year maturity with a five-year non-call period, meaning NEXTDC cannot redeem them before the end of year five. The coupon structure is designed to incentivise early redemption: 7.50% per annum for the first five years, stepping up to 9.20% thereafter. If the hybrids are not redeemed at the end of year five, a one-off special coupon is payable to bring the total yield for years one to five to 9.20%.
| Feature | Detail |
|---|---|
| Issue size | A$1.7 billion total |
| Maturity | 100 years |
| Non-call period | 5 years |
| Initial coupon | 7.50% p.a. (fixed, years 1-5) |
| Step-up coupon | 9.20% p.a. (from year 5) |
| Ranking | Junior to all debt, senior to equity |
NEXTDC retains the right to defer coupons at its discretion, subject to a dividend and capital stopper regime. Coupons may also be deferred where an event of default subsists under the company’s senior debt facilities.
Accelerated S4 timeline and FY27 capex trajectory
The company plans to invest approximately A$1.5 billion in the accelerated development of contracted utilisation at S4 through to the end of FY27, aligning capital deployment with customer delivery requirements. This customer-led acceleration has prompted NEXTDC to revise its FY26 capital expenditure guidance to a range of A$2,700 million to A$3,000 million, up A$300 million from prior guidance.
The revised guidance reflects further acceleration of planned inventory expansion and the purchase of long-lead items associated with the S4 build-out. For the second half of FY26, the company expects to deploy between A$1,415 million and A$1,715 million in capital expenditure.
Looking ahead, NEXTDC has flagged that heightened capital expenditure will continue through FY27. Against the backdrop of the record Forward Order Book and accelerated S4 delivery, the company currently forecasts FY27 capex to be approximately A$5.0 billion.
- FY26 capex: A$2,700 million to A$3,000 million (previously A$2,400 million to A$2,700 million)
- 2HFY26 capex: A$1,415 million to A$1,715 million
- FY27 capex forecast: Approximately A$5.0 billion
- S4 investment through end of FY27: Approximately A$1.5 billion
FY26 Net Revenue and Underlying EBITDA guidance remain unchanged. The elevated capex profile signals management confidence in converting the Forward Order Book to revenue, whilst the joint venture strategy offers potential future monetisation of development assets.
Scroggie on the strategic rationale
The CEO outlined the company’s approach to balancing immediate capacity delivery with longer-term capital optimisation. NEXTDC continues to evaluate capital partnership structures across its development portfolio, including S4 and the future S7 site, as projects progress and value creation opportunities are optimised.
Craig Scroggie
“Bringing forward the development of S4 is expected to facilitate NEXTDC in capturing the rapidly growing customer demand that exists today, while also further de-risking the S4 development to maximise the value of any future JV partnerships for NEXTDC shareholders.”
The company’s immediate priority is the delivery of the additional capacity at S4 announced on 20 April 2026. The development of S7 will follow in due course, with the goal of de-risking both projects ahead of any potential joint venture transactions with private capital partners from 2027.
The next major ASX story will hit our subscribers first
What comes next for investors
The institutional component of the Entitlement Offer opened on 20 April 2026, with results expected to be announced on 22 April 2026. The retail component will open at 9:00am Sydney time on 27 April 2026 and close at 5:00pm Sydney time on 11 May 2026. The Record Date for determining entitlements is 7:00pm Sydney time on 22 April 2026.
Eligible retail shareholders who take up their full entitlement may also apply for Additional New Shares at the Offer Price for up to a maximum of 100% of their existing entitlement under a Top Up Facility. Additional New Shares will only be available where there is a shortfall, and there is no guarantee that participants will receive any Additional New Shares.
- Retail Offer opens: 9:00am Sydney time, 27 April 2026
- Retail Offer closes: 5:00pm Sydney time, 11 May 2026
- Settlement of Retail Entitlement Offer: 15 May 2026
- Allotment of New Shares: 18 May 2026
- Normal trading commences: 19 May 2026
Beyond the Entitlement Offer and Hybrid Securities, NEXTDC has flagged multiple additional capital initiatives. The company intends to pursue a subordinated notes issue in the wholesale debt market in the near term, subject to prevailing market conditions. Management is also well advanced on an initial incremental A$1.5 billion funding package from key relationship banks, with further senior debt capacity anticipated as Contracted EBITDA grows.
The combination of contracted capacity growth, diversified funding, and potential joint venture monetisation pathways creates multiple catalysts through FY27 and beyond. The company’s pro forma Forward Order Book of 544MW provides visibility into revenue conversion over the FY26–FY30 period, whilst ongoing customer discussions at various stages of progression suggest further contract wins may be announced in accordance with continuous disclosure requirements.
Want the Next AI Infrastructure Breakout in Your Inbox?
Join 20,000+ investors receiving FREE breaking ASX tech news within minutes of release, complete with in-depth analysis. Click the “Free Alerts” button at Big News Blast to get real-time alerts the moment market-moving announcements hit the wire.