Fermi Inc. priced an upsized $375 million aggregate principal amount of 5.00% convertible senior notes due 2031, a move that has sparked internal governance disputes. The offering, which closed on July 14, 2026, was not communicated to the full board prior to announcement, leading to the resignation of former CFO Miles Everson from the company's board. Co-founder and largest shareholder Toby Neugebauer criticized the board for circumventing basic protocol on a $375 million financing round. The notes are senior, unsecured obligations offered to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933.

The company granted initial purchasers an option to purchase up to an additional $56.25 million in aggregate principal amount. Fermi intends to use the net proceeds, estimated at approximately $362.25 million, to pay for capped call transactions to offset share dilution, with the remainder allocated for general corporate purposes. The notes will pay interest semi-annually on January 15 and July 15, beginning January 15, 2027, and will mature on July 15, 2031. The initial conversion rate is 105.0862 shares per $1,000 principal amount, equivalent to an initial conversion price of approximately $9.52 per share.

Governance and Board Resignation

Miles Everson, former CFO of Fermi, resigned from the board citing a failure by the company to provide required board minutes and governance records. His resignation letter stated that the full board was not notified of the financing transaction before it was publicly announced. Neugebauer, who beneficially owns 146,516,035 shares, expressed concern over the board's lack of financial expertise to navigate the project financing required to execute a tenant contract. The Melissa A. Neugebauer 2020 Trust retains the right to designate a replacement nominee.

Key Details of the Offering

The company entered into privately negotiated capped call transactions to reduce potential dilution. The effective conversion price of $14.64 represents a 100% premium to the closing sale price on July 9, 2026, meaning no dilution to shareholders until the stock price reaches that level. Neugebauer reaffirmed his confidence in securing Fermi's first tenant, citing Project Matador as a valuable asset in the AI race.

Toby Neugebauer, co-founder and largest shareholder of Fermi Inc., has suspended his current proxy campaign following the last-minute recusal of the presiding Texas Business Court judge. The decision comes despite Neugebauer securing more than 70% of votes cast in favor of a special meeting and support from proxy advisory firms Glass Lewis and Egan-Jones. The judge's recusal, which occurred shortly before a scheduled hearing, requires a new judge to review the board's 70% supermajority bylaw change and previous expedited discovery orders, effectively derailing the timeline required to seat new directors and oversee a dual-track strategic review.

The legal dispute centers on Fermi's adoption of bylaws requiring a 70% supermajority to expand the Board, a move Neugebauer argues is an attempt to entrench power and suppress shareholder rights. Prior to the recusal, the court had granted Neugebauer's emergency motion for expedited discovery, compelling Fermi to provide documentation and testimony regarding its rationale for opposing the special meeting. Neugebauer stated that while the judicial process will continue to seek good governance, the altered timeline no longer supports running a true dual-track process on the schedule Fermi requires to be successful.

Neugebauer beneficially owns 146,516,035 shares, representing approximately 22.7% of Fermi's outstanding common stock. His ownership includes 44,656,376 shares held by Vicksburg Investments Management LLC and 94,359,659 shares held by the Melissa A. Neugebauer 2020 Trust, along with 7,500,000 shares underlying RSUs that vested upon his termination without cause. The Board of Directors had previously determined that the special meeting sought by the Neugebauer Group did not serve shareholder interests, warning it would grant approximately 40.3% voting control to a single shareholder group.

Despite suspending the solicitation of GREEN agent designation cards, Neugebauer reaffirmed his confidence in Fermi's future, specifically regarding the potential tenant deal for Project Matador. He emphasized that the asset, referred to by Seeking Alpha as the "most valuable asset in the AI race," requires the original "Fermi 2.0 mentality" to execute strong agreements on time and on budget. Neugebauer pledged to monitor the Board's execution and reserved the right to resume his campaign at the annual meeting if necessary to safeguard shareholder value.