NEXION’s Convertible Note Raise Signals Uncertainty Over Proposed Deal
NEXION Group has issued 800,000 convertible notes to raise $80,000, with repayment expected in cash but conversion to shares possible pending approvals. The funds aim to support costs related to a potential transaction whose future remains uncertain.
- Issued 800,000 unsecured convertible notes at $0.10 each
- Total convertible notes on issue now 16.6 million
- Notes mature May 31, 2026, with 10% annual interest
- Conversion to shares and options subject to shareholder approval and ASX consent
- Company currently expects full cash repayment without conversion
Convertible Note Issue Details
On August 12, 2025, NEXION Group Ltd (ASX, NNG) announced the issuance of 800,000 convertible notes priced at 10 cents each, raising $80,000 in fresh capital. This latest tranche increases the total convertible notes on issue to 16.6 million. The notes carry a 10% annual interest rate and mature on May 31, 2026.
The notes are unsecured and come with terms that allow NEXION to repay them in cash at any time before maturity. Interest payments are due either at maturity, upon conversion, or if repaid early at the company's discretion.
Purpose and Strategic Context
The funds raised are earmarked to cover costs associated with identifying and advancing a potential transaction previously announced in April 2024. However, the company has signaled that it currently expects to repay the convertible notes in full in cash, rather than converting them into equity.
This cautious stance reflects ongoing uncertainty around the proposed transaction. Conversion into shares and free-attaching options is contingent on several conditions, including shareholder approval, no objection from the ASX, and confirmation that the proposed acquisition will not proceed or does not occur by maturity.
Conversion Terms and Investor Incentives
Should conversion occur, noteholders would receive fully paid ordinary shares calculated at the face value of the notes divided by $0.10, plus 4.25 free-attaching options per share. These options would be exercisable at $0.001 each and expire on June 30, 2026. Collectively, these shares and options are referred to as Conversion Securities.
While this structure offers potential upside for noteholders, the company’s current expectation of cash repayment suggests a preference to avoid equity dilution at this stage.
Company Profile and Market Position
NEXION Group operates in the technology sector, specializing in hybrid-cloud systems that integrate software, compute, storage, network, and cybersecurity. The company owns a 2MW data centre in Perth, Western Australia, which supports its cloud services infrastructure.
This capital raise, though modest, is a tactical move to sustain operational flexibility as NEXION navigates its strategic options in a competitive and capital-intensive industry.
Bottom Line?
Investors will be watching closely for shareholder decisions and the fate of the proposed transaction to gauge NEXION’s next capital moves.
Questions in the middle?
- Will NEXION’s shareholders approve the conversion of notes into equity if the proposed transaction falls through?
- What is the likelihood that the proposed acquisition announced in April 2024 will proceed or be abandoned?
- How might the company’s capital structure and share dilution risk evolve if conversion occurs?
