#USA #Dallas #Fermi Inc #Toby Neugebauer #Vicksburg Investments

Fermi Founder Parties Propose Strategic Review

In a notable move ahead of Fermi Inc.’s annual meeting slated for October 30, Toby R. Neugebauer, representing the largest shareholder group at approximately 22% of the company's shares, has put forth a formal proposal aimed at instigating an independent strategic review. This proposal, filed under SEC Rule 14a-8, seeks to engage a nationally recognized investment bank to assess potential extraordinary transactions that could elevate shareholder value.

On September 10, Neugebauer shared his concerns regarding the company's recent performance and strategies in a communication directed towards the board. Since August 13, when the board announced the completion of their 90-day objectives, shares have plummeted approximately 20%. The situation worsened following the board's decision to discard a dual-path strategic process on July 2 and Neugebauer's removal as CEO on April 17, leading to a staggering 35% drop since then.

Neugebauer's analysis reveals significant gaps in Fermi's current strategies. The company’s TensorWave lease, which constitutes a mere 5% of Fermi's declared near-term power potential of 4.8 GW, raises doubts. As of early September, Fermi had yet to ensure the guaranteed agreement needed to support this lease or confirm secured project financing. Additionally, Neugebauer highlighted the limitations posed by a 2.5% ownership cap in Fermi’s charter, restricting institutional investors from acquiring substantial positions. The recent appointment of Lee McIntire as CEO after a lengthy search further indicated a lack of external interest in leading the company.

In his direct response to the board, Neugebauer emphasized the need to rebuild stakeholder trust that has eroded alongside the diminutive stock performance. He articulated that the company's appeal as a unique private utility has been tarnished by the recent actions of the board and management, which have failed to align with stakeholder expectations.

Apart from the official proposal, Neugebauer also submitted a detailed presentation urging the board to consider two additional recommendations during the Annual Meeting. First, he called for the reinstatement of prior voting standards for bylaw amendments and director elections, which had been altered since April. Second, he proposed a reconsideration of Fermi’s REIT ownership limit, raising it from 2.5% to 9.8%, aligning it with industry peers, thereby allowing institutional investors to have a more significant stake in the company.

Despite the challenges, Neugebauer remains steadfast in his commitment to Fermi. He stated that neither he nor the Melissa A. Neugebauer 2020 Trust has sold any shares since its IPO, highlighting their long-term dedication to both the company and the Amarillo community. He also emphasized the necessity for transparency, encouraging the release of all prior communications between him and the board, which could aid shareholders in making informed decisions regarding the upcoming proposals.

Fermi’s strategic approach is crucial at this juncture, as Neugebauer believes the company's potential remains vast, especially with its capability to generate AI compute at scale while ensuring no undue burden is placed on local ratepayers amidst the ongoing AI crisis. Through careful evaluation and a genuine reassessment of its strategies, Neugebauer is hopeful that Fermi can regain its standing and effectively serve its stakeholders.

The upcoming Annual Shareholder Meeting is poised to be a pivotal moment for Fermi, with Neugebauer's proposals likely to spark significant discussions surrounding the company’s future. It remains to be seen how the board will respond to these urgent calls for reassessment and strategic realignment. As the date approaches, stakeholders will be watching closely with hopes of restoring confidence and improving performance in the months ahead.