Fermi Inc. (NASDAQ: FRMI) co-founder and largest shareholder Toby Neugebauer is calling for a special shareholder meeting to replace the company’s board, proposing a slate of seven new directors to force a strategic review of its flagship “Project Matador.”
“My sole focus is on ensuring Fermi reaches its full potential,” Neugebauer said in a May 21 press release, arguing for a dual-track process to maximize shareholder value. “We need to evaluate every strategic path for the company at Fermi speed.”
The activist push follows Neugebauer’s termination as CEO on April 17, a move that sent the stock down 22 percent over two days. Neugebauer, who controls about 23 percent of Fermi’s shares, proposes a 75-day timeline to complete the strategic review and decide on a potential new owner for the company by August 1.
Neugebauer’s plan would have a new, independent board explore a full sale, merger, or strategic partnership for the energy and data center development company. Simultaneously, current management would continue its efforts to secure large-scale tenants for its planned 11-gigawatt campus in Amarillo, Texas. He argued this competitive tension would produce the best risk-adjusted outcome for shareholders.
The Case for a Sale
In an investor presentation, Neugebauer detailed four major risks facing Project Matador as it moves from groundwork to construction: leasing price risk, financing risk, shareholder dilution risk, and counterparty risk. He argued that the project’s increasing capital intensity and the company’s higher cost of capital make a strategic review necessary.
He suggested the ideal owner for the project would possess the “Three Cs”: a low cost of Capital, proven Construction capability, and either be a Customer or have access to customers. Neugebauer identified six categories of potential buyers, including hyperscalers, chip manufacturers, and private equity funds. He estimated a chip company could generate as much as $10.5 billion in annual EBITDA from just one gigawatt of Project Matador’s power.
Governance Dispute
Neugebauer claims the current board has refused to engage in a strategic process and has taken "incredibly aggressive" actions since his departure, including changing company bylaws to raise the voting threshold required to expand the board to 70 percent. The company has stated that it rejected Neugebauer’s call for a sale, believing it is not in the best interest of its momentum on Project Matador.
The proposed slate of new directors includes former Mellon Investments CIO David Daglio, corporate governance expert Charles Elson, and former PwC Global Advisory Vice Chairman Juan Pujadas.
This activist campaign introduces significant uncertainty for Fermi’s path forward. A successful proxy fight could lead to a sale of the company or its primary asset, while an unsuccessful attempt could result in a prolonged and costly distraction for management. Investors will be closely watching for the scheduling of the special shareholder meeting, which Neugebauer hopes to convene around June 30.
This article is for informational purposes only and does not constitute investment advice.
