NEXTDC secures A$1.1 billion in convertible notes to fund data centre growth pipeline
NEXTDC Limited (ASX: NXT) priced an offering of A$1,100 million in 1.75% per annum subordinated convertible notes on 10 September 2026, with settlement expected on 17 September 2026 and maturity set for 17 September 2031. The company expects to receive net proceeds of approximately A$1,006 million after the cost of the Capped Call Transactions and before other transaction costs, with the balance directed toward its Australian data centre development pipeline and general corporate purposes.
The Australian data centre development pipeline that proceeds from this offering are earmarked to fund had reached 740MW of pro forma contracted utilisation as at 30 June 2026, with a 565MW forward order book still to convert progressively to revenue and EBITDA through FY30.
Craig Scroggie, CEO and Managing Director, NEXTDC
“I am pleased to see such strong support for the Offering. The transaction provides NEXTDC with efficient, committed funding for our development pipeline and diversifies NEXTDC’s sources of capital with a new deep global investor base whilst preserving our senior debt capacity and balance sheet flexibility.”
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Key terms investors need to understand
Subordinated convertible notes are a form of debt instrument that sit below senior debt in the repayment hierarchy but above ordinary shares. Investors receive regular coupon payments, and the notes can convert into ordinary shares at a predetermined price — or, in this case, NEXTDC may elect to settle conversions in cash instead of issuing new shares. Companies use this structure to access capital at a lower coupon rate than traditional bonds while offering investors potential upside linked to the share price.
The table below summarises the final key terms of the Convertible Notes as set out in the Appendix to the ASX announcement.
| Key Term | Detail | Reference Share Price Basis | Premium / Rate | Date / Maturity |
|---|---|---|---|---|
| Issue Size | A$1,100 million subordinated convertible notes | N/A | N/A | Priced 10 September 2026 |
| Coupon | 1.75% per annum, payable semi-annually | N/A | 1.75% p.a. | Until maturity or earlier redemption |
| Initial Conversion Price | A$16.6950 per Ordinary Share | A$12.60 (Delta Placement Price) | 32.5% conversion premium | Conversion period opens 28 October 2026 |
| Cap Price | A$21.4200 per Ordinary Share | A$12.60 (Delta Placement Price) | 70% premium to Reference Share Price | Expires 17 September 2031 |
| Maturity Date | 17 September 2031 | N/A | N/A | 17 September 2031 |
| Investor Put Date | Noteholders may require redemption at principal | N/A | N/A | 17 September 2029 |
| Capped Call Cost | Cash-settled call options purchased by NEXTDC | Strike equal to Initial Conversion Price | N/A | Cost: A$93.61 million, funded from gross proceeds |
How the conversion mechanics work
The conversion price structure is built on a fixed reference point, with several key dates governing when noteholders may act. The mechanics are as follows:
- Reference Share Price: A$12.60 (the Delta Placement Price)
- Conversion premium: 32.5% above the Reference Share Price
- Initial Conversion Price: A$16.6950 per Ordinary Share
- Conversion Period opens: 28 October 2026
- Investor Put Date: 17 September 2029 — noteholders may require redemption at principal on this date
- Final Conversion Period begins: 11 June 2031
Importantly, NEXTDC retains the right to settle any conversion in cash rather than issuing new Ordinary Shares. Where NEXTDC elects cash settlement, the amount payable will be no less than 100% of the principal amount converted.
The Capped Call Transactions explained
Alongside the Offering, NEXTDC purchased cash-settled call options, referred to as the Capped Call Transactions, from two financial institutions. These options are intended to provide NEXTDC with an economic hedge against increases in the Ordinary Share price between the Initial Conversion Price of A$16.6950 and the Cap Price of A$21.4200 per share.
The Capped Call Transactions are cash-settled and will not reduce the number of Ordinary Shares on issue upon conversion. NEXTDC will not be hedged against any share price increase above the Cap Price of A$21.4200. The cost of the Capped Call Transactions was A$93.61 million, funded from the gross proceeds of the Offering, and they expire on 17 September 2031, aligning with the Convertible Notes’ maturity date.
Delta Placement and what it means for existing shareholders
In connection with the Offering, a Delta Placement of approximately 18.6 million existing Ordinary Shares was completed at A$12.60 per Ordinary Share, representing a discount of 1.5% to the ASX closing price on 9 September 2026. The Delta Placement facilitated the initial delta hedge required by investors in the Convertible Notes, with shares borrowed from the stock borrow market in the ordinary course.
NEXTDC did not issue any new Ordinary Shares and did not receive any proceeds from the Delta Placement. The number of Ordinary Shares on issue does not change as a result of it. The Delta Placement Price of A$12.60 serves as the Reference Share Price used to calculate the Initial Conversion Price of the Convertible Notes.
Investors should be aware that hedging and trading activities by the Capped Call Counterparties and convertible note investors may affect the market price of Ordinary Shares and the Convertible Notes from time to time.
Pro forma liquidity exceeds A$9.7 billion
Following the Offering, NEXTDC’s pro forma total available liquidity at 30 June 2026 would have been approximately A$9,776 million before costs of the Offering and the Capped Call Transactions. This is based on pre-offering pro forma liquidity of A$8,676 million reported in the company’s FY26 results materials lodged with ASX on 27 August 2026, comprising:
- Cash: A$876 million
- Undrawn senior debt facilities: A$7,100 million (includes A$2,300 million announced 10 July 2026, which reached financial close on 15 July 2026)
- Undrawn Hybrid Securities B Delayed Draw Series: A$700 million (drawable until May 2027)
The new Convertible Notes rank equally with NEXTDC’s existing A$750 million Subordinated Notes issued in April 2026, and sit junior to senior debt while ranking senior to Hybrid Securities and Ordinary Shares.
The new Convertible Notes rank equally with NEXTDC’s existing A$750 million Subordinated Notes issued in April 2026, part of a broader multi-instrument capital strategy that began with the company’s hybrid securities offer earlier that month, which introduced La Caisse as a cornerstone institutional backer.
For investors, the capital raise carries several implications for NEXTDC’s near-term position:
- Confirms committed funding runway for the Australian data centre development pipeline
- Diversifies funding sources with access to a new global institutional investor base
- Preserves senior debt capacity for operational flexibility
- The cash settlement election on conversions maintains balance sheet optionality
As management noted in the announcement, the Offering is intended to provide committed funding for NEXTDC’s development pipeline while preserving flexibility to support further customer-led growth.
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