Bidding war costs Asia Pacific Data Centre Group $1.4M

Bidding war costs Asia Pacific Data Centre Group $1.4M

Costs associated with Asia Pacific Data Centre Group's impending buyout have added up to more than $1 million

Asia Pacific Data Centre Group (APDC) spent almost $1.4 million in fees related to the buyout proposals from bidding rivals, NEXTDC and 360 Capital, as of 25 August.

NEXTDC and 360 Capital Group have been in a drawn-out bidding war for APDC - the company that owns the property and buildings housing a number of NEXTDC's data centres - since earlier this year, with 360 Capital Group initially moving to buy up a controlling stake in the property company and replace its management team with its own.

Now, according to financial results filed with the Australian Securities Exchange (ASX), the data centre property group incurred $607,000 in costs related to a cancelled shareholder meeting called by 360 Capital on 28 June.

These costs occurred after the financial year end on 30 June 2017.

APDC also revealed that the group incurred $539,000 in costs in relation to the 360 Capital proposal and the NEXTDC (ASX:NXT) offer, also costs paid after FY17.

The financial results were finalised and audited on 25 August. At the time, the company said that the planned Target Statement and the recommendation it was about to make in relation to NEXTDC’s offer were going to cost $250,000.

These costs could have had an impact in the September 2017 distribution, the company said, resulting in less distribution than June 2017 or none at all. In fact, a letter to shareholders of 25 September stated that the board determined not to pay the September quarter distribution to investors.

NEXTDC has been trying to buy back ownership of APDC since at least July, as a response to 360 Capital’s acquisition of 19.8 per cent of the group.

Currently, an offer made by 360 Capital, of $1.95 per share, is under consideration by APDC.

On 10 October, NEXTDC submitted an application with the Australian Government Takeover Panels against the 360 Capital Group’s bid to takeover APDC.

The data centre provider is requesting that all APDC securities acquired by 360 Capital on-market after the publication of the bidder’s statement and before the date of the corrective disclosure, it is requesting, be unwound.

According to the application, the bidder statement from 360 Capital discloses an intention that the APDC may make a contribution to its security shareholders after the close of the offer, which currently sits at $1.95 per security.

The problem raised by NEXTDC is that 360 Capital as security holders would effectively use this contribution to repay a debt facility available to fund its bid.

NEXTDC said that this would constitute financial assistance and require security holder approval and both the bidder and target’s statements do not disclose this information adequately.

The Asia Pacific Data Centre Group is a special purpose real estate investment trust (REIT) which was established to own properties – including land and buildings – that are operated or being developed as data centres.

The sole assets of the publicly-listed group, which was originally spun off by NEXTDC as an independent entity several years ago, are three data centre properties, Sydney (S1), Melbourne (M1) and Perth (P1), all of which are occupied by NEXTDC under long-term lease arrangements.

At the time of writing, APDC had not responded to ARN's queries.

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Tags takeoverNextDCbuyoutAsia Pacific Data Centre Group360 CapitalAPDC


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