Fermi's first tenant of massive Trump-named power project backs out of funding deal

By Tomi Kilgore

Fermi's stock is rocked, as the company with plans to be a big player in the AI-power business and a REIT is having trouble closing a deal with its first tenant

Fermi, co-founded by a former secretary of energy, Rick Perry, said the first potential tenant of Project Matador has backed out of an agreement to provide $150 million in advance construction funding.

Shares of Fermi Inc. crumpled Friday after the company with links to President Donald Trump was surprised by some bad news from what was supposed to be the first tenant of its massive data-center power project in Texas.

For a company (FRMI) that plans to be a real-estate investment trust - which generates income from its tenants - not having any tenants would be a big problem.

The company, which went public on Oct. 1 through a high-profile initial public offering, wants to be a big player in the artificial-intelligence power business. Its primary focus is Project Matador, which includes building and operating the Donald J. Trump Generating Plant.

In addition to the name of the plant, the company has connections to Trump through co-founder Rick Perry, a former Texas governor who served as secretary of energy during Trump's first term.

But after strong demand for Fermi's IPO, the stock has tumbled, and it closed Thursday 27.4% below its IPO price of $21 a share.

The company previously said that "an investment grade-rated" entity had signed a letter of intent in September to be its first tenant and had in November signed what's known as an Advance in Aid of Construction Agreement to provide up to $150 million to Fermi to fund construction.

On Friday, Fermi disclosed in a filing with the Securities and Exchange Commission that the potential first tenant had said it was "terminating the AICA."

Fermi's stock plummeted 44.8% in recent morning trading, enough to make it the biggest decliner listed on the New York Stock Exchange. It was most recently trading 59.9% below its IPO price.

Fermi said it had not yet drawn on any funds under the AICA and that it would continue to negotiate terms of a lease agreement at Project Matador with the potential tenant.

The company also said that it still believes Project Matador will be able to meet its expected power-delivery schedule.

Evercore ISI analyst Nicholas Amicucci wrote in a note to clients that the termination of the agreement was "not the surprise we were hoping for." He said the termination now calls into question the previously signed letter of intent.

"While Fermi had yet to draw on the fund under the agreement, this is a clear negative development in the negotiation process, in our view," Amicucci wrote in a note to clients.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

12-12-25 1026ET