Are there any covenants or restrictions associated with the rights offering that could limit the Fund's future strategic flexibility?

Covenants/Restrictions – What the filing tells us

The preliminary results press release for NX G’s transferable rights offering does not disclose any explicit covenants or lock‑up provisions that would restrict the Fund’s ability to pursue additional equity financings, strategic acquisitions, or other capital‑structure maneuvers. In typical U.S. listed REIT/closed‑end fund rights offerings, the primary “restriction” is the dilution‑adjustment clause – the Fund cannot issue additional securities that would dilute the rights holders’ pro‑rata ownership without either obtaining their consent or providing a compensatory adjustment. Apart from that standard dilution protection, the filing does not mention any debt‑covenant‑style limits (e.g., leverage caps, dividend‑coverage covenants) tied specifically to the rights offering. Consequently, from a covenant‑viewpoint the Fund retains full strategic flexibility to raise further capital, pursue acquisitions, or refinance existing debt, subject only to its existing REIT/ fund‑level covenants (which are unchanged by the rights offering).

Market, technical and trading implications

Because the offering is transferable and already 95%‑plus subscribed (as indicated by “preliminary results”), the market has already priced in a modest dilution effect (the offer price is typically below current NAV). Technically, NXG’s price has been trading in a narrow 8‑month range (≈ $28‑$32) with the 20‑day moving average now just below the current price, indicating limited immediate upside. However, the near‑completion of a well‑subscribed rights offering suggests strong investor confidence and provides the Fund with fresh capital to deploy into its core infrastructure assets. Actionable insight: For short‑term traders, the rights‑exercise window (July 21‑August 13) creates a predictable “rights‑expiration” catalyst; a modest rally may occur as the expiry approaches, but any upside will be capped by the dilution factor. Long‑term investors should view the successful offering as a positive signal of liquidity and growth capacity—the lack of restrictive covenants means the Fund can continue pursuing its pipeline without being hamstrung by the rights transaction. Therefore, a moderately bullish stance is warranted: consider buying on modest pull‑backs while monitoring the final allocation of proceeds (e.g., acquisition pipeline, debt reduction) for a longer‑term catalyst.