Fermi Secures $431 Million to Power Texas AI Campus
New York, Wednesday, 15 July 2026.
Despite reporting zero revenue, Fermi raised $431 million for its Texas AI power project, sparking a sharp stock drop and a sudden board resignation over poor communication.
Expanding the Capital Raise
The newly closed financing marks a significant expansion of the company’s capital-raising efforts. As previously reported by WSNext, Fermi America initially planned to launch a $350 million debt offering to protect shareholder value and secure long-term liquidity [7]. However, on July 14, 2026, the Dallas-based energy developer successfully finalized and closed an upsized private offering of 5.00% convertible senior notes due July 15, 2031 [1][3][4]. The total aggregate principal amount reached $431.25 million, representing a substantial increase over the initial baseline [1].
Analyzing the Terms and Over-Allotment Option
The final figure reflects the full exercise of a $56.25 million over-allotment option by initial purchasers, which was added to the upsized $375 million base offering advised by legal firm Vinson & Elkins [3]. This final total of $431.25 million represents an increase of 23.214% over the initially proposed $350 million offering [1][2][3]. From the gross proceeds, Fermi plans to allocate approximately $34.5 million to fund strategic capped call transactions, leaving net proceeds of roughly $416.81 million for general corporate purposes and operational milestones [1].
Mitigating Dilution Amid Market Turbulence
To address shareholder concerns regarding equity dilution, Fermi structured the notes with a capped call feature [1]. This mechanism establishes an effective conversion price of $14.64 per share, which represents a 100% premium over the company’s common stock closing price of $6.48 on July 10, 2026 [5]. Despite these protective measures, the initial announcement of the debt offering on July 9, 2026, sparked negative retail sentiment, causing the stock to tumble 18% in after-hours trading [2]. Market volatility was further exacerbated by derivative hedging activities from option counterparties, which heavily influenced trading dynamics [2].
Financial Realities and Equity Declines
The market’s cold reception reflects broader anxieties about Fermi’s financial position. As of July 14, 2026, the company’s stock had experienced a year-to-date decline of 1.74% [2], leaving it 78% lower than its peak levels in October 2025 [5]. These equity struggles are compounded by the pre-revenue developer’s current balance sheet, which showed zero revenue and a substantial net loss of $188.69 million during the first quarter of 2026 [5].
Boardroom Drama and Governance Disputes
Beyond market volatility, the rapid execution of the debt offering has triggered severe internal governance friction. Former Chief Financial Officer Miles Everson abruptly resigned from Fermi’s board of directors following the completion of the transaction [4]. In a sharply worded resignation letter, Everson clarified that his departure was not due to personal reasons or ordinary-course transitions, but rather a direct protest against the company’s failure to provide board members with required communications, committee minutes, and governance records necessary for informed service [4].
Shareholder Backlash and Board Nominees
Co-founder and largest shareholder Toby Neugebauer, who beneficially controls 146,516,035 shares of Fermi common stock, revealed that the governance breakdown occurred because the company completed the offering without notifying all board members in advance [4]. Despite the friction, Neugebauer expressed continued confidence in the company’s commercial path [4]. The Melissa A. Neugebauer 2020 Trust, which holds board nomination rights, is currently vetting candidates to designate Everson’s replacement [4].
Strategic Rationale and Project Matador Milestones
Despite the boardroom turbulence, Fermi’s executive team remains focused on the commercial deployment of Project Matador, an ambitious artificial intelligence and energy campus located on a 3,035-hectare (7,500-acre) site in Carson County, Texas [5]. CFO Rob Masson emphasized that bolstering the balance sheet is a critical 90-day milestone designed to strengthen Fermi’s negotiating position with potential tenants and strategic partners [1]. To date, more than $1.4 billion has been invested in the project, supported by nearly $1 billion in prior commitments [1].
Navigating Execution Risks and Power Capacity Targets
The newly secured capital provides the necessary runway to advance multiple commercial tracks, including a targeted ramp-up to 1.5 gigawatts of power capacity by 2027 [1]. To meet its target of delivering 200 MW of initial commercial power by the fourth quarter of 2026, Fermi must overcome several immediate execution risks [5]. These include securing its first binding tenant agreements, navigating an ongoing CEO search led by Heidrick & Struggles, and resolving an active class-action lawsuit concerning past representations of tenant demand [5].