NextDC served with lawsuit over data centre site access

NextDC CEO, Craig Scroggie

NextDC (ASX:NXT) has been hit with legal action by Asia Pacific Data Centre Group (ASX:AJD), which owns three of the properties in which the data centre operator houses its sites, over access rights.

NextDC, which is publicly-listed on the Australian Securities Exchange (ASX), told shareholders on 19 April that the data centre property investment group, which was initially spun out of NextDC, had initiated legal proceedings.

The proceedings are related to a dispute over Asia Pacific Data Centre Group’s (APDC) claimed ongoing access rights at NextDC’s S1, M1 and P1 sites in Sydney, Melbourne and Perth, respectively.

"Following numerous attempts seeking access to the APDC portfolio for both the independent valuers and prospective purchasers to inspect the facilities, APDC Trust has now made an application to the NSW Supreme Court to seek specific performance under each of the leases to allow the inspections to take place," the property group told shareholders.

"As part of the Court application, APDC has also sought a declaration that NextDC’s conduct is in breach of its leases across their Sydney, Melbourne and Perth data centres within APDC Trust for failing to comply with the Landlord’s requests for access," it said.

NextDC said it intends to defend itself against Asia Pacific Data Centre Group’s claims.

The legal spat comes after a long and drawn-out battle for control over the data centre property investment group, in which NextDC remains a minority stakeholder, following moves last year by 360 Capital Group (ASX:TGP) to buy up a controlling stake of the property group.

In July last year, NextDC subsequently made a multi-million dollar bid to wrest back ownership of Asia Pacific Data Centre Group after 360 Capital Group’s overtures.

On 9 October last year, NextDC submitted an application to the Takeover Panels against the 360 Capital Group’s bid to buy out Asia Pacific Data Centre Group. The data centre operator wanted to get its hands on all the APDC shares that had been acquired by 360 Capital over the space of several months.

After the Takeovers Panel decided not to intervene in the matter, 360 Capital Group quietly bought up a greater shareholding of the data centre property group, attaining 65.52 per cent of the voting rights in the company, as at 15 November 2017.

NextDC subsequently told shareholders it was concerned over the governance track record of the 360 Capital Group, which now controls the property investment group, with “limited true independent controls”. 

Regardless, under the de facto control of 360 Capital Group, Asia Pacific Data Centre Group later embarked on what it called a global sales campaign for the sale of its three data centre properties for a target price of around $300 million.

The company said on 14 February it had entered into a 21-day exclusive due diligence period with the “preferred party” to purchase the entire portfolio of data centres owned by the APDC Trust.

The agreed price of $280 million equated to a five per cent initial yield, and a premium of $767.2 million, or 31.6 per cent to the last independent valuation, the group said at the time.

However, after the unnamed buyer subsequently pulled out of a potential deal to purchase the property assets in March, the publicly-listed data centre property group offered the property portfolio to NextDC for $265 million.

NextDC rejected its first right to refusal of an offer for Asia Pacific Data Centre Group’s property portfolio for $265 million,  leaving the property group to find a buyer for the portfolio at or above the initial $265 million offered to NextDC.

Just days ago, on 17 April, NextDC announced plans to raise $281 million to purchase three new commercial property sites for future data centre developments, revealing plans for new data centres in Sydney (S3), Melbourne (M3) and provided additional detail about its proposed Perth footprint expansion (P2).