Nextdc Shares Rebound as Lender Covenants Clear With Room to Spare
Published on 10/28/2026 at 16:31 | Editorial boerse-global.de
Nextdc has moved to shore up confidence in its balance sheet, disclosing that it comfortably met both of its financial covenants — a announcement that sent the data-centre operator's stock sharply higher even as the operational cloud hanging over its Melbourne M3 project refuses to lift.
The shares climbed 12% on the day, having already added 8.8% in pre-market trading, as investors latched onto the financing reassurance rather than the revenue warning that preceded it.
Ample Headroom on Both Tests
As of the June 30 test date, Nextdc's pro-forma interest coverage ratio stood at 5.91 against a required minimum of 1.5. The leverage ratio came in at 8.2% versus a permitted ceiling of 60%. The company said it expects to remain compliant at the next test on December 31 as well.
Those figures carry weight because they address a different risk than the guidance cut that has weighed on the stock. Delayed revenue does not, by itself, mean a company has breached its financing terms. Nextdc also put its covenant EBITDA headroom at A$526.8 million.
Should investors sell immediately? Or is it worth buying Nextdc?
Yet the cushion is not a freely drawable credit line. Fresh borrowings can push up interest costs before new customer contracts begin generating billable revenue — a timing mismatch that the covenant disclosure does nothing to resolve.
How the Pro-Forma Numbers Are Built
The reliability of the ratios depends heavily on how they are calculated. Nextdc's pro-forma covenant EBITDA, at A$706.0 million, folds in a contribution from contracted business on top of actual EBITDA, and therefore should not be read as an operating result already earned.
Specifically, the calculation incorporates an additional 73 MW of contracted usage that Nextdc expects to begin billing from the second half of fiscal 2027. Contracts tied to the M3 site in Melbourne are excluded altogether, as are any potential service-level credits, reflecting the uncertain timeline for grid upgrades. Other M3 contracts are, according to the company, fully operational.
The pro-forma figures are unaudited and explicitly not a forecast for the next test date. Jemena, the network operator, does not expect the first additional power supply before fiscal 2028.
Liquidity Is More Than Cash in the Bank
Beyond the covenants, the composition of Nextdc's liquidity matters. A large headline funding figure does not mean all of it is sitting in an account or available without conditions.
At September 30, the company reported liquidity of A$8.675 billion, of which A$1.275 billion was cash. The remainder consists of undrawn facilities and committed hybrid capital, with access tied to conditions and continued covenant compliance.
The Grid Bottleneck Behind the Downgrade
None of this reverses the operational problem at the heart of the recent guidance cut. On October 21, Nextdc lowered its FY27 net revenue forecast to A$475 million–A$500 million, citing delays to power grid expansions serving M3 in Melbourne.
Adjusted EBITDA guidance for FY27 now sits at A$245 million–A$265 million, and the company also trimmed its capital expenditure outlook, which it now pegs at A$4.5 billion–A$5 billion for the year.
Nextdc at a turning point? This analysis reveals what investors need to know now.
The constraint is not a speculative expansion without customers attached. The delay pushes back the delivery and billing of capacity that is already under contract. Reuters reported that Jemena Electricity Networks paused parts of the work amid opposition from residents and interest groups, and did not expect to resume before February 2027. The upshot: roughly A$140 million of contracted customer revenue is likely to slip out of FY27.
Boardroom Shake-Up Ahead of the AGM
Alongside the financial clarification, Nextdc is moving on governance. On Monday the company announced a board refresh, with chairman Douglas Flynn set to step down once a successor is named. The search has been widened to include an independent non-executive director.
Ahead of the November 20 annual general meeting, sitting non-executive directors have voluntarily accepted a 10% cut in their fees, while CEO Craig Scroggie has agreed to forgo short-term and long-term incentive awards for FY27.
The market's reaction is a vote on balance-sheet safety, not on operations. What Nextdc needs now is progress on the grid connection and on delivering the capacity it has already sold.
Ad
Nextdc Stock: New Analysis - 28 October
Fresh Nextdc information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
