Tenant NextDC wants to wind up data centres trust

Led by Tony Pitt, 360 Capital finally won out in a back-and-forth takeover tussle with NextDC for control of APDC, with Mr Pitt moving on to the board last month after ending up with 67.3 per cent of the register.

But NextDC, led by Craig Scroggie, still holds 29.2 per cent and will use its stake to call an extraordinary meeting of shareholders early next year to vote on winding up the property trust and distributing the proceeds to its investors.

NextDC could then be expected to try to buy back the three data centres it occupies as they were sold off through the wind-up.

At issue for NextDC is Mr Pitt’s move last week to increase the property trust’s debt with a $100 million facility.

As part of its takeover offer the fund manager has also flagged a plan to issue a 65¢ capital distribution that it will use to repay its loans.

Independent controls

In a statement on Thursday, NextDC said it has “elevated concerns over the governance track record of the 360 Capital” which is now controlling APDC “with limited true independent controls”.

The proposed 65¢ capital distribution was not in the best interests of shareholders because it would increase APDC’s debt to “imprudent levels and thereby significantly elevate its risk profile”, it said.

That would then cut into future distributions and restrict the data centres trust’s ability to fund growth initiatives, it said.

“Given actions to date, NextDC has no confidence that the 360 Capital-appointed board of APDC will seek the required security holder approvals before proceeding with the proposed capital distribution,” it said.

NextDC’s wind-up gambit is the latest move in a bitter battle over the data centres fund between its only tenant and the veteran fund manager, Mr Pitt.

A wind-up motion would require at least 50 per cent of eligible shareholders to support it.

At issue would be whether 360 Capital could vote its stake at that meeting.

NextDC is expected to assert that 360 Capital should be excluded from any wind-up vote on the basis that it is an entity associated with control of the trust and has an interest in the outcome.

If that happened NextDC would account for the overwhelming majority of the remaining shareholding eligible to vote.