DXN has signed a purchase agreement with telco services provider TasmaNet to acquire its data centre in Hobart, while announcing plans to raise $6 million to fund the acquisition.
DXN has signed a purchase agreement with telco services provider TasmaNet to acquire its data centre in Hobart, while announcing plans to raise $6 million to fund the acquisition.
DXN will acquire TasmaNet’s Data Centre 3 for an upfront cash payment of $2.7 million and a performance incentive payment of 25 per cent growth from earnings before interest, tax, depreciation and amortisation within the first three years.
Established in 2017, DXN designs, builds, owns and operates data centres, including in Sydney and Melbourne.
DXN chief executive Matthew Madden said the agreement with TasmaNet reflected the company’s vision to be Australia’s leading ‘edge’ data centre operator.
“Our plan is to continue to expand our carrier neutral edge data centre footprint in Australia and New Zealand,” Mr Madden said.
“This target will be achieved by developing new greenfield modular data centres, such as our new Sydney data centre and/or acquiring existing operating data centres, such as (TasmaNet’s) D3.”
The Hobart centre is a government accredited modular data centre that provides services to the Tasmanian government, and is one of only three commercial data centres in the state.
In the 2019 financial year, TasmaNet recorded revenue of approximately $860,000 and EBITDA of around $450,000.
DNX said the cash payment to TasmaNet represented a six times EBITDA multiple.
“It is a condition precedent to settlement of the acquisition that TasmaNet signs a national customer agreement with DXN with a minimum commitment of $860,000 per annum for three to five years,” Mr Madden added.
He said the acquisition was a low-cost entry into the edge data market.
TasmaNet chief executive Elizabeth Aris said the company would provide ongoing support and sales activity for Data Centre 3 and other centres DXN rolls out.
“The Hobart centre has a strong customer base including key sovereign clients and we are experiencing very solid annual growth, which is expected to increase in line with nbn growth,” Ms Aris said.
To fund the acquisition, DXN will issue approximately 151.4 million shares at 4 cents per share under a one-for-three rights issue to raise around $6 milliom.
Pinnacle Corporate Finance is acting as lead manager and underwriter to the offer, while Mr Madden along with other DXN executives will commit to $100,000 worth of shares.
The offer is due to close on March 13.
Shares in DXN were down 8.51 per cent at 1:15pm AEDT to trade at 4.3 cents per share.
