By Jennifer Hiller
Seven months ago, former Energy Secretary Rick Perry described as genius an idea from Texas energy billionaire Toby Neugebauer to build the world's largest data center on a dusty grazing lease near Amarillo.
"There will be an M.B.A. case study written about what you guys pulled off -- I'm telling you," Perry said to Neugebauer onstage at an October nuclear power conference.
Today, the men are on opposite sides of a bitter showdown over the company they co-founded.
Fermi raced to go public last year -- it was founded in January and held its initial public offering in October to capitalize on two booming trends: AI data centers and renewed interest in nuclear power. The startup courted investors with ambitious plans for a sprawling data-center and energy campus named for President Trump on land owned by the Texas Tech University System.
It has promised to generate enough electricity to match what many states produce, largely with natural gas-fired equipment and four large nuclear reactors. Electricity would flow directly to sprawling on-site data centers filled with rows of servers running AI workloads for tech companies.
Things haven't gone according to plan.
Fermi, which hasn't generated any revenue, has yet to land the kind of marquee tech tenant needed to finance the project. Insiders, including Perry's son, have unloaded shares, which have plunged about 80% from their public debut.
The company ousted Neugebauer as CEO last month for what it called unauthorized actions, policy breaches and a pattern of abusive behavior, according to a termination letter included in court filings. Neugebauer's legal team argues his firing was retaliatory because he and others raised governance concerns to the board.
Neugebauer -- who says he, his family and current or former executives close to him hold about 40% of Fermi shares -- is pushing for change. He wants to see the company sold or matched with a strategic partner that could bring a lower cost of capital, a record in construction "and a customer at the table."
Neugebauer called a shareholder meeting in April to vote on new directors he is nominating to the board, but Fermi's new leadership canceled it. The board on Wednesday amended the bylaws to require a 70% shareholder vote to change the number or tenure of directors, from a majority.
"Mr. Neugebauer's proposals, taken together, would result in Mr. Neugebauer taking control of the company and advance his stated goal of selling Fermi quickly," the board said in a statement this past week. His plan would lock in losses for shareholders given the sagging stock price, the directors added.
Neugebauer said he wants to "ensure the board considers every option," including a sale, and called the bylaw change an "unprecedented act of entrenchment -- they're simply running scared because they don't want shareholders to have a real voice."
Perry, who sits on the board, said he supports the company's new leadership.
"The team leading this next chapter has my full confidence and support," he said in a statement. "We have the right leadership, land, permits, equipment, and partners to scale to commercial operations."
Neugebauer and Perry's son, Griffin Perry, discussed the idea for Fermi while on one of their frequent walks in their Dallas neighborhood. Neugebauer later brought the idea to Rick Perry, who elevated Fermi's profile with his political connections as a longtime Texas governor and former Trump administration official. Griffin Perry's firm said it remains the second-largest shareholder behind Neugebauer and has "strong conviction" in Fermi's prospects.
Fermi was valued at roughly $19 billion upon its public debut in October, but its market value has since shrunk to less than $5 billion. Tensions at the company had been rising for months.
Fermi had a prospective data-center client in Amazon, but that deal didn't materialize, according to people familiar with the matter.
Without a customer in place, the pace of construction slowed. Satellite images suggest the company started moving dirt on the site in October, but there wasn't significant construction activity between February and late March, according to research firm Cleanview.
Dissension among the board grew, and Neugebauer's charismatic, but at-times abrasive, style rubbed some the wrong way, some of the people said.
Fermi said in court documents that Neugebauer wreaked havoc on relationships with key counterparties and stakeholders. One told Fermi "it would not do a deal unless Fermi agreed Mr. Neugebauer would not communicate directly with its employees."
Neugebauer, who co-founded the private-equity firm Quantum Energy Partners, is no stranger to controversy. He is the former chief executive of the failed anti-woke bank startup GloriFi, which raised tens of millions of dollars from high-profile investors, including Ken Griffin and Peter Thiel, before going bust in a matter of months. The registration paperwork for Fermi's IPO listed the bankruptcy and related lawsuits as a potential distraction.
Neugebauer has said he remains committed to Fermi: He hasn't sold shares but thinks the project needs a different owner, such as a hyperscaler, data-center owner or oil-and-gas developer to move forward.
"Toby Neugebauer is a fierce, successful businessman with deep energy sector experience who was able to take Fermi from an idea to a multibillion-dollar publicly traded company in less than a year," a spokeswoman said. "He is being dragged through the mud by a small number of Fermi board members desperately clinging to power for their own gain."
For their part, Fermi executives and board members have framed the upheaval as a pivot from a startup to an institutional "Fermi 2.0" that can offer the ingredients needed for AI projects racing to build.
The company reported on Thursday a $189 million net loss for the first quarter, along with $243 million in total cash. It said it has secured about $940 million in financing and has "a clear path to commercial power delivery later this year." Co-President Anna Bofa said multiple prospective tenants and partners have visited Fermi's site in the past two weeks.
"The most important message is that the market has not walked away from this asset," she said.
Write to Jennifer Hiller at jennifer.hiller@wsj.com
(END) Dow Jones Newswires
May 16, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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