Why Did NEXION Group Raise $80K Through Convertible Notes Now?
NEXION Group has issued 800,000 convertible notes to raise $80,000, aiming to fund costs related to a proposed acquisition. The notes carry a 10% interest rate and may be repaid in cash or converted into shares and options, pending shareholder approval.
- Issued 800,000 unsecured convertible notes at $0.10 each
- Raised $80,000 to support costs of proposed acquisition
- Convertible notes mature on 31 May 2026 with 10% annual interest
- Conversion into shares and options subject to shareholder approval and ASX consent
- Company currently expects full cash repayment without conversion
Convertible Notes Issuance
NEXION Group Ltd (ASX – NNG) has announced the issuance of 800,000 convertible notes priced at $0.10 each, raising a total of $80,000. This latest tranche increases the total number of convertible notes on issue to 15.1 million. The notes were issued to investor Wong Chi Wai Roy and are unsecured, carrying a 10% annual interest rate.
Purpose and Terms
The funds raised are earmarked to cover costs associated with a proposed acquisition first disclosed in April 2024. The convertible notes mature on 31 May 2026, with interest payable either at maturity, upon conversion, or if the company elects to repay early. Notably, NEXION retains the option to repay the notes entirely in cash before maturity, a scenario the company currently anticipates.
Conversion Conditions and Potential Dilution
Conversion of these notes into equity is contingent on several conditions – shareholder approval for issuing the conversion securities, no objection from the ASX, and either confirmation that the proposed acquisition will not proceed or that it has not occurred by maturity. If converted, noteholders would receive fully paid ordinary shares plus free-attaching options exercisable at a nominal price, potentially diluting existing shareholders. However, NEXION’s current expectation is to repay the notes in cash, avoiding immediate dilution.
Strategic Context
NEXION operates in the hybrid-cloud technology space, owning a 2MW data centre in Perth, Western Australia. The company’s move to raise funds via convertible notes underscores its strategic intent to pursue growth through acquisitions, while balancing capital structure flexibility. Investors will be watching closely for updates on the proposed transaction and the outcome of upcoming shareholder approvals.
Bottom Line?
NEXION’s convertible notes issuance signals cautious progress toward acquisition funding, with cash repayment likely but conversion risks lingering.
Questions in the middle?
- Will shareholder approval be granted for conversion securities if the acquisition stalls?
- What is the timeline and likelihood of the proposed acquisition proceeding?
- How might potential conversion impact NEXION’s share capital and investor returns?
