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Why Fletcher Building And NEXTDC Shares Are In A Trading Halt

Fletcher Building Limited (ASX: FBU) shares and NEXTDC Ltd (ASX: NXT) shares are in a trading halt today.

Fletcher Building is one of New Zealand’s biggest companies, while NEXTDC is a leading data centre owner and operator.

Fletcher Building

Shares of the construction company have gone into a trading halt today as the company seeks to sell new shares to investors and use the money to strengthen its balance sheet and focus on its portfolio of projects. Fletcher Building will look to raise NZ$750 million, with investors able to buy 1 share for every 4.46 that they own at NZ$4.80 per share.

Fletcher Building management said that the proceeds will be used to pay down existing debt, although it has also established a new banking facility of NZ$500 million with Australia and New Zealand Banking Group (ASX: ANZ), MUFG Bank and Westpac Banking Corp (ASX: WBC).

The Fletcher Building Board have approved a strategy of focusing on the Australia and New Zealand regions, which is why it will divest its Formica and Roof Tile Group businesses.

Management stated that there is no change to its estimated EBIT for the 2018 financial year (click here to learn what EBIT means).

NEXTDC

Shares of the data centre company entered a trading halt as it also seeks to sell new shares and raise money from investors. It announced that it is going to purchase three new commercial property sites for future data centre developments. One will be in Sydney, one will be in Melbourne and one will be in Perth. It will be funded by a $281 million placement of shares.

NEXTDC said that it continues to experience very strong demand for its premium data centre services and it’s in advanced negotiations with several large customers. It is taking this opportunity to make sure it has sufficient capacity rather than run out, allowing the business to respond quickly to market demand.

The company expects the Perth centre to be completed in the first half of the 2020 financial year.

NEXTDC re-iterated underlying day to day profit (EBITDA) of $58 million to $62 million (click here to learn what EBITDA means) and revenue of between $152 million to $158 million.

Nextdc’s CEO, Craig Scroggie, said: We are incredibly excited by the breadth and depth of these new investments that will further support the exponential growth of the digital economy in Australia. Over time these new infrastructure developments are expected to be the largest of their kind in Australia.”

Takeaway

We won’t know what the market thinks of these capital raisings until Fletcher Building and NEXTDC come out of their trading halts. Until then shareholders will need to decide if they want to invest in more shares or not.

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