NextDC trades barbs with 360 Capital over data centre acquisition

NextDC has traded barbs with the investment firm attempting to acquire the $207 million trust that owns three of its data centres.

Asia Pacific Data Centre Group's sole properties are occupied by NextDC's Sydney (S1), Melbourne (M1) and Perth (P1) data centres. The trust was spun off from NextDC four years ago and trades on the Australian Security Exchange as AJD.

In May, 360 Capital acquired a 19.9 percent in APDC to become its largest shareholder. Last month, the investment firm proposed to replace APDC's board of directors with its own members in order to actively manage the trust and invest in the data centre market.

APDC rejected the plan, revealing it was in talks to sell the business to an unnamed third party. NextDC sided with APDC by buying up a 14.1 percent stake for $29 million to vote against the takeover.

360 Capital responded by offering to buy the shares it didn't already own in the trust for $1.80 each in a non-binding proposal, which was rejected by APDC. 360 Capital has since resubmitted the proposal, dropping the caveat of replacing APDC's board of directors. The new proposal also includes no minimum acceptance condition, giving shareholders an avenue to exit their investment.

360 Capital claimed that APDC and NextDC both refused to engage in the proposal likely due to the clause of replacing the board.

"As stated previously, 360 Capital believes data centres as a real estate class is very exciting and that the facilities in AJD are world class leased to a proven operator in NextDC Limited and we look forward to working with them if we are successful in this proposal," 360 Capital said in a statement.

NextDC refuted the claim, saying 360 Capital has not been in contact since it acquire its stake in APDC, and that the firm is yet to put forward a formal proposal it could engage with.

The data centre operator confirmed it has also upped its stake in APDC even further, bringing its share to 17 percent.

360 Capital also claimed that NextDC could put undue pressure on APDC when it comes to an upcoming market rent review in December. NextDC pointed out that APDC's board was independent, and that all conduct between the two parties reflected an arm's length commercial agreement.

NextDC chief executive Craig Scroggie said he was concerned that 360 Capital was trying to distract shareholders from engaging in real issues.

"We firmly believe that the 360 Capital Proposal is contrary to good corporate governance principles as well as the interests of AJD security holders," he said.

"Consistent with our views, independent proxy advisor firm, ISS, has firmly rejected the assertions of 360 Capital and advised its clients to vote AGAINST the resolutions. Importantly, ISS has noted the concerns over 360 Capital's corporate governance track record in addition to issues regarding independence and conflicts of interest."

Shareholders will vote whether to accept 360 Capital's proposal on Friday.