NEXION Group has entered a non-binding agreement to sell its Perth data centre subsidiary to Canadian firm Carrier Connect Data Solutions for AUD 2.5 million, aiming to strengthen its balance sheet.
- Non-binding LOI signed for sale of NEXION’s data centre subsidiary
- Sale price set at AUD 2.5 million with structured payment terms
- Proceeds earmarked for debt repayment and working capital
- No changes to NEXION’s board or senior management planned
- Transaction expected to be net cash positive upon completion
NEXION’s Strategic Move
NEXION Group Ltd (ASX: NNG), a technology company specialising in hybrid-cloud systems, has announced a significant step in reshaping its asset portfolio. The company has signed a non-binding letter of intent (LOI) to sell its wholly owned subsidiary, Nexion W1 DC Pty Ltd, which operates its 2MW data centre in Perth, Western Australia. The prospective buyer is Carrier Connect Data Solutions Inc., a Canadian data centre operator listed on the TSX Venture Exchange.
Deal Structure and Financial Implications
The agreed consideration for the sale stands at AUD 2.5 million, payable in a combination of upfront cash and a vendor take-back note. An initial payment of AUD 200,000 is due at closing, followed by AUD 100,000 six months later. The balance will be financed through a vendor take-back note bearing 9% interest, amortised over 25 years with a five-year term. This structured payment approach provides NEXION with ongoing income while facilitating immediate debt reduction.
Importantly, until full payment is received, NEXION will continue invoicing customers and managing data centre operations, ensuring continuity of service. The company intends to apply the sale proceeds primarily to repay existing debt, cover administrative expenses, and bolster working capital, signaling a focus on strengthening its financial position.
Operational and Governance Stability
The transaction is not expected to trigger any changes in NEXION’s board or senior management, indicating confidence in the current leadership team’s ability to navigate this transition. Carrier Connect Data Solutions, founded in 2022 and headquartered in Vancouver, brings a complementary focus on co-location and data centre services, suggesting potential operational synergies post-sale.
Next Steps and Market Outlook
Carrier has an exclusive due diligence window until 15 May 2025, with an exclusivity period to finalise a definitive agreement by 30 May 2025. While the LOI is non-binding, the outlined terms and timeline reflect a clear intent to progress swiftly. For NEXION, this divestment marks a pivotal moment to recalibrate its business model and financial health amid a competitive technology landscape.
Investors will be watching closely as the deal unfolds, particularly how the company leverages the net cash positive outcome to support future growth initiatives or reduce leverage.
Bottom Line?
NEXION’s data centre sale could be a turning point in its financial strategy, with the market awaiting definitive deal closure.
Questions in the middle?
- Will the vendor take-back note terms impact NEXION’s future cash flow and risk profile?
- How will the sale affect NEXION’s long-term strategic focus in hybrid-cloud services?
- Could Carrier’s acquisition lead to operational changes or partnerships benefiting NEXION?