A boardroom dustup is casting a new shadow over efforts to build what is billed as the world's largest data campus in the Texas Panhandle.
The company behind the project, a real estate investment trust called Fermi America, announced last week that it had terminated CEO Toby Neugebauer for cause, as a result of "conduct in violation of the terms" of his employment agreement and company policies. Neugebauer, who co-founded the company with former Texas governor and former U.S. Energy Secretary Rick Perry, quickly fired back, filing suit claiming he was improperly removed.
The C-suite shake-up is just the latest setback for a company that is in the process of building a sprawling data center campus spanning 7,570 acres. The complex, dubbed Project Matador, aims to be the largest hub of its kind by acreage, square footage and power once it is built out to total 11 gigawatts and 18 million square feet of space.
An initial phase of 2.6 million square feet of data center space with 1.1 gigawatts of power from natural gas was supposed to be complete by the end of 2026. But that timeline has become cloudy after the project's first major tenant terminated an agreement in December that was slated to bring $150 million in construction funding to the site near Amarillo, Texas.
Fermi America's stock has fallen drastically since then, and the company's market cap was around $3.6 billion as of mid-day Wednesday — a fraction of its $19 billion valuation at the time of its initial public offering only months earlier.
"Two steps forward and two steps back has seemed to be the mantra for Fermi since its IPO last year," Hoya Capital Real Estate Chief Investment Officer David Auerbach told CoStar News in an email. He is not directly involved with Fermi but is an analyst who has covered the REIT industry that includes companies like Fermi for more than 25 years.
Project Matador already has six of the 17 gigawatts permitted for behind-the-meter power — or energy generated and stored outside of a power grid, the company said on its website. Fermi expects to source its power from behind-the-meter, solar, battery and advanced nuclear energy.
New plan
As part of its decision to part ways with Neugebauer, the company announced its Fermi 2.0 plan aimed at shoring up leadership and making other operational changes. In the plan, Fermi has decided to make Dallas its headquarters with its Amarillo office near the project site remaining a part of its business.
The company did not immediately respond to an emailed request from CoStar News seeking more information about its new strategic plan or where it would locate its headquarters in Dallas. Fermi hinted in the April statement that the Dallas headquarters would be located in "a premier office park."
Texas Tech University System, a university system leasing the land near Amarillo to Fermi for the data center project, is working with the REIT to extend certain milestones in the 99-year ground lease agreement and remains committed to the partnership, the system's chancellor said in a joint statement with Fermi.
Fermi's 2.0 plan included naming Marius Haas as its new board chairman. Haas has had previous senior leadership roles at major tech companies such as Dell Technologies, Hewlett-Packard and Intel.
Fermi also created an office of the CEO, with former Chief Operating Officer Jacobo Ortiz Blanes and prior board adviser Anna Bofa each taking on the role as co-president. Ortiz Blanes is the founder of Las Brisas Property Management, the largest real estate services firm in Puerto Rico and the Caribbean. Bofa's career has included stints at Google, Dropbox, Pinterest and Meta.
The moves are what Hoya Capital's Auerbach said are a good start, but it will take "good execution with a well-respected management team" to succeed.
Fermi nominated Larry Kellerman, the company's chief power officer, to its board this week. Fermi's other board members include Perry, Haas, Cordel Robbin-Coker, Lee McIntire, Jeffrey S. Stein and Miles Everson, according to the company's website.
Legal hurdle
Neugebauer, who remains the company's largest shareholder, filed a lawsuit on May 1 in a Texas business court, alleging that he was improperly removed as the company's CEO and from the board of directors. The lawsuit lists Fermi Inc., Haas, McIntire and Robbin-Coker as defendants. In the petition, Neugebauer said that excluding him from Fermi’s board "would cause irreparable injury to any company, but it will be particularly harmful" for Fermi because it is "currently in a critical stage of its development."
In regulatory filings on Tuesday, Neugebauer called for a special meeting of shareholders on May 29 in a move where he plans to nominate new directors that can vote on Fermi's future, including a possible sale or merger.
Fermi responded with its own regulatory filings that recommended shareholders not take any action to support Neugebauer's solicitation that "reflect the actions of a disgruntled former CEO who was terminated for cause."
Fermi's filing said the company's stock declined by more than 80% under Neugebauer’s leadership.
In Neugebauer's statement on Tuesday, he said, "I could not be prouder of the execution and progress with tenants at the time of my departure.
"I saw Project Matador's potential realized, and that's why I have yet to sell a single share of Fermi since the IPO because I know exactly what it is worth," Neugebauer added. "We built a world-class company in record time, and my focus is entirely on protecting and realizing that value for all shareholders."