Fermi signs US$200M prepayment agreement for 600 MW Texas development
The Financial Times identifies Amazon as the customer, while Fermi says a definitive long-term lease remains under negotiation.
Ines Halvorsen
For 2027, an initial 600 megawatts of power capacity at Project Matador are proposed under development agreements Fermi Inc. NASDAQFRMI LONFRMI announced on Thursday. The agreements include a US$200 million customer prepayment to support the proposed development at the Texas data-centre campus.
The Financial Times reported on Friday that Amazon.com, Inc. NASDAQAMZN is the customer, citing people familiar with the arrangement. Fermi keeps the customer's identity confidential and says a definitive long-term lease remains under negotiation. Its release gives neither a lease duration nor a power price per megawatt-hour.
Fermi shares NASDAQFRMI closed 26.7 per cent higher at US$2.61 on Nasdaq at 4:00 p.m. EST on Friday. The company develops private electricity grids for large computing campuses and remains pre-revenue.
The customer funding would support development ahead of a completed lease. Fermi's Thursday announcement also includes a US$15 million early construction and site development agreement, while a separate US$90 million purchase agreement for structural steel and building materials is still being finalized.
The construction agreement establishes a framework for advancing site preparation and construction to maintain the customer's desired schedule. Fermi says the proposed materials purchase would let the customer use long-lead supplies it secured in advance to accelerate construction of multiple data centres.
Fermi describes the US$200 million commitment as a prepayment agreement in its Nov. 12 release, without specifying a receipt date. The announcement therefore does not establish when that cash becomes available for construction.
At Sept. 30, Fermi had US$315.5 million in cash and restricted cash against US$958.4 million in outstanding debt, net. It reported a third-quarter net loss of US$141.6 million in the Nov. 12 release.
The Nov. 12 release attributed most of the quarterly loss to general and administrative expenses, including non-cash stock compensation and advisory fees settled in shares.
For the nine months ended Sept. 30, investment in property, plant and equipment totalled US$759.5 million.
The company invested US$133.4 million in property, plant and equipment during the quarter ended Sept. 30. Its net property, plant and equipment balance reached approximately US$1.67 billion at Sept. 30.
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Lease Conditions Precede Vertical Construction
Fermi says conditions under its land lease with the Texas Tech University System precede vertical construction. The Nov. 12 release reaffirms the partnership but does not enumerate those conditions.
The Financial Times reports that the land lease requires a definitive agreement with a tenant taking at least 200 megawatts by Dec. 31. That requirement concerns a completed tenant agreement, while Fermi's disclosed customer arrangements precede the final lease.
"The parties continue to work toward a definitive long-term lease and finalization of the steel purchase agreement," Fermi said in its Nov. 12 release.
The underlying customer contracts were not reviewed; the disclosed commercial terms come from Fermi's release and its accompanying Nov. 12 SEC report. The Financial Times reports that Fermi intends to commence work by Dec. 1, ahead of the Dec. 31 tenant-agreement deadline.
