NEXTDC scores 1.5 MW deal; announces plans for second Sydney site

NEXTDC has made a series of announcements today: a customer contract for 1.5MW, new plans for another Sydney data center and the opportunity for a $150 capital raising.

NEXTDC will provide 1.5MW to an unnamed international customer in Sydney, the same customer who has been involved in an initial contract as far back as December 2015. The company says the deal 'exhausts the Customer's rights of first refusal relating to the S1 facility', so the new contract will cover the company's S1 data center facility.

According to NEXTDC, the new contract has boosted the center's utilisation to 82%, up from 71% three months ago.

As a result, the company has decided to make plans for a second Sydney data center, to be named 'S2'. Several sites are being considered for the build. The S2 center will deliver a planned target of 30MW and is expected to be complete in 2018.

"S1 has proven to be highly successful for the company in a relatively short timeframe. We are confident that the demand in Sydney, together with our return expectations, warrants the next phase of investment," comments Craig Scroggie, NEXTDC CEO.

The company is seeking $150 million through a fully underwritten capital raising, which will include a Placement Offer and an Entitlement Offer for investors. The company says the $150 million will be used to purchase land and to develop S2, in addition to 'other corporate purposes'. The company plans to invest $140-$150 million in S2 between 2017 and 2018, with the bulk of spending ($60-$100 million) planned in 2017.

The company says it expects to generate returns more than the original cost of capital, providing opportunities for shareholders over the long term.

The company also has new data centers in Brisbane (B2), Melbourne (M2), and the company expects to own the land that the new S2 facility will be built on, offering more control over assets and scalability.

"NEXTDC continues to evolve and refine the design of our facilities; S1 is already one of Australia's most awarded data centers, and with a planned 30MW at full fit out, S2 will have roughly double the capacity of S1, and be designed for its critical infrastructure to scale with customer uptake and adapt to their specific needs," Scroggie concludes.