NEXTDC falls on scrapped SPP

Management said the share purchase plan wouldn't proceed because of share price volatility, but given its high offer price it probably would have flopped.

If data centre operator NEXTDC (NXT) was hoping that the scrapping of the retail shareholders’ component of its equity raising would take the pressure off its share price, it would be disappointed.

The stock fell 1.2% to a 2½-month low of $2.44 this morning after management said it would not precede with its $10 million share purchase plan (SPP) due to “its recent share price volatility”.

The SPP would probably have flopped given that the offer price is $2.60 a share, but NEXTDC’s chief executive Craig Scroggie is adamant that the offer wasn’t priced too high and that the new capital shortfall would not have any impact on the company’s plans.

“There is no immediate impact to our plans, the business is directing the funds raised towards delivery of customer contracts over the next 12 months,” he says. “We have more than $150 million in capital at our disposal.”

The SPP was run on the back of a successful $50 million placement to professional investors and company said it planned to use the proposed $60 million raising to fund a faster fitout of its data centres, for working capital and to pursue “strategic growth opportunities”.

Scoggie won’t admit it, but NEXTDC is probably disappointed that it will have $10 million less in the bank as he pointed out to Eureka Report that the company has more expansion opportunities than its resources can meet. The extra cash would have come in useful.

The new share offer was priced at a skinny 3.7% discount to NEXTDC’s last closing price before the equity raising announcement on August 20.

NEXTDC, which is part of the Uncapped 100, has also recently attracted the interest of short-sellers.

The stock is seen by many as a market darling and is up 23% over the past 12-months.