Fermi’s Largest Shareholder Renews Push For Immediate Sale, Claims Board Fumbled $10B-$20B Valuation Opportunity

Toby Neugebauer, co-founder and largest shareholder of Fermi, renewed calls for a sale or strategic partnership of the company last week.

• Neugebauer said that more than 61% of shareholders had rejected former U.S. Energy Secretary and Texas Governor Rick Perry’s re-election to the board.
• He also accused the board of being a victim of its own bylaw changes, noting that in August, it changed the company’s bylaws without a shareholder vote. 
• Fermi’s shares have lost about 80% of their value since the start of the year. 

Shares of Fermi LLC (FRMI) gained more than 1% in the overnight session late Sunday as Toby Neugebauer, the company's co-founder and largest shareholder, renewed calls for a sale or strategic partnership in a letter last week. 

Neugebauer also said that more than 61% of shareholders had rejected former U.S. Energy Secretary and Texas Governor Rick Perry’s re-election to the board, adding that “the public markets and the voters of Texas have all reached the same verdict” on the board led by Marius Haas.

Neugebauer Escalates Issue With The Board

“On May 22, I proposed a dual-track process to sell or partner Fermi while still evaluating the standalone plan. At the time, indicative enterprise valuations for Fermi ranged from $10 billion to $20 billion. Several of the world's leading investment banks reached out to Fermi, only to be rebuffed. I suspended my proxy campaign on July 3 to give the board room to run that process. It still has not,” Neugebauer said in a statement last week.  

Fermi’s largest shareholder noted that the stock has lost more than 80% of its value since then and that its cost of capital has exploded. “Every share Fermi issues today raises about one-fifth of what it would have raised when I stepped back,” he said. 

Neugebauer also accused the board of being a victim of its own bylaw changes, noting that in August, it changed the company’s bylaws without a shareholder vote. He called the board’s call at the time “scripted,” adding that accusations by the company that he did not vote for Perry were false. 

He also called into question Fermi’s board's execution of its tenant strategy, alleging that the former management had been pursuing a potentially larger lease agreement with TensorWave and another prospective customer before their departure. 

“The board has still not announced that critical closing conditions such as secured financing have been met,” he said. 

"Fermi's problems are not with us. We suspended our proxy campaign four months ago, when Fermi stock was more than five times today's closing price. Since then, this board has failed at every turn. But ever since Fermi falsely reported my termination in its 8-K filings, I have done two things: fight for shareholder rights and defend myself against the company's attacks. The answer is the one I proposed in May: Fermi must put the company up for sale now, while simultaneously closing a tenant deal. Fermi needs a partner with a lower cost of capital, construction expertise and a customer,” Neugebauer said. 

Fermi Vs Neugebauer: Governance Battle

The dispute between Fermi and former CEO and largest shareholder Neugebauer has escalated into a corporate-governance battle after the company removed him as CEO in April. 

Later, Fermi also terminated Neugebauer for cause, removing him from the board. Neugebauer has since sought shareholder support to reshape the board and explore strategic alternatives, including a potential sale. 

In September, Neugebauer sued three directors, alleging they coordinated efforts to consolidate control and limit shareholder rights. Neugebauer’s amended lawsuit alleges Fermi directors repeatedly changed bylaws to raise shareholder-voting thresholds after his proxy campaign, while Fermi dropped a related Texas lawsuit after the court granted him discovery. 

FRMI Stock: Retail Stance

On Stocktwits, retail sentiment around FRMI stock slipped from ‘neutral’ to ‘bearish’ territory over 24 hours amid ‘normal’ message volumes. 

One user said, “$FRMI retail buying shares of empty fields.”

Another user said, “$FRMI remember insiders paid almost nothing for their shares last year. What did they bring to investors a plot of land and an idea that would lead to dilution? Makes sense why they cashed out.”

However, a third user said, “$FRMI I have a suspicion that a prospective partner or now owner has already been interested for at least a few months, but I'm just guessing.. Price is now right....and  one I suspect is a hard dealer, but a very good record of success.  just a thought if you hold  a reasonable weighting, worth hanging around some, with asm next week for sure.”

FRMI stock is down more than 80% year-to-date. 

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