Mystery solved: Amazon is the prospective tenant in talks with data center developer rocked by stock plunge

• Amazon has been in talks to become the "first tenant" at Fermi America's Texas data centers, Fermi CEO Toby Neugebauer told BI.
• Fermi's stock slumped after it said the prospective anchor tenant canceled a $150 million advance.
• Talks between the two companies remain constructive, Neugebauer said.

Amazon is the prospective tenant that withdrew funding from Fermi America's massive data-center project, sending the developer's stock plummeting earlier this month, Business Insider has learned.

In September, Fermi, which is developing an 11-gigawatt data-center campus in the Texas Panhandle, said it had agreed to a nonbinding letter of intent with an investment-grade tenant to anchor the project. The tenant would take the first gigawatt of power across 12 facilities.

On Friday, December 12, Fermi's stock plunged by nearly half after a securities filing said an unnamed prospective partner had canceled a $150 million advance to begin construction, known as an Advance in Aid of Construction Agreement, or AICA. The cancellation followed the end of an exclusivity period.

Amazon is that tenant, Toby Neugebauer, Fermi's billionaire CEO, confirmed in a December 15 phone call with Business Insider, discussing the talks that led to the cancellation. The tech giant has been negotiating the deal, which would pay more than $20 billion over the next 20 years, Neugebauer said.

"The lead negotiator for Amazon called me on Thursday," Neugebauer said.

Neugebauer said the talks between Fermi and the tenant remain constructive, and that the ending of the AICA didn't indicate any breakdown in conversation.

"It's just a normal negotiation," he said. "Their issue was spending money after the exclusive period had ended."

Neugebauer said he wasn't worried about the talks taking too long. "It's a big deal," he said. "Big deals take longer."

Lisa Levandowski, a spokesperson for Amazon, declined to comment.

Fermi America's Panhandle project ranks among the most ambitious attempts yet to meet the surging energy demands of the data centers fueling the AI boom. The company intends to bring 11 gigawatts of new power online over the next decade-plus with a mix of power from the grid, natural gas, and nuclear sources.

The company went public in September, pricing its shares at $21 to raise more than $680 million.

Dubbed Project Matador, the development relies on a 99-year ground lease with the Texas Tech University System. That agreement is dependent on a signed letter of intent between Fermi America and a tenant.

The December 12 filing said that none of the $150 million construction advance had been used and that the negotiations were ongoing. The letter of intent remains in force.

Analysts at Cantor Fitzgerald said in a note published December 12 that they had spoken to Fermi America's management and learned that, per the company, the anchor tenant "tried to make last-minute changes to the agreement pricing that were unacceptable to" Fermi.

Amazon is the second company to be linked to the project. In October, Neugebauer told the Amarillo City Council that Palantir, the software company known for its police and government contracts, had taken an interest in the site.

"I just finished with Palantir, which is our nation's tip of the spear in the AI war," Neugebauer said during the October 28 meeting. "They'll be here Thursday."

The Cantor Fitzgerald analysts said in their note that management indicated that they were "active" with two additional tenants, and in dialogue with another four.

Fermi America was founded less than a year ago by Neugebauer, former Energy Secretary Rick Perry, and Perry's son Griffin. The IPO valued the company at nearly $14 billion.

A recent slump in the company's shares has brought its valuation to below $6 billion.

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