Fermi outlines financing plan for Matador project with planned capacity of 17 gigawatts
Key Facts
Fermi outlined a plan in an October 21 shareholder letter to finance development of its Matador project, which has a planned capacity of 17 gigawatts, while reducing the capital supplied by the company. Chief Executive McIntyre said the priority would be powered-land deals, with customers able to handle construction given the option to do so. The company aims to secure customer funds early through development contributions, mobilization payments and infrastructure financing arrangements. The plan includes obtaining project-level debt and bringing in strategic investment partners to limit financial commitments at the parent company. McIntyre defined success as "sustainable cash flows and the returns we deliver to our shareholders," according to Investing's account of the letter.
Fermi is building relationships with infrastructure investors and financial institutions to provide construction financing and project capital, according to its letter. Those relationships also aim to secure financing commitments across Matador's development stages, while the company retains an economic interest in the assets. Fermi describes the project as a planned private power and artificial intelligence campus in the Texas Panhandle. On execution, it announced the arrival of 3 GE Vernova gas turbines at the project site in Carson County, Texas. For the project's nuclear component, the company said the final environmental review, safety evaluation and Nuclear Regulatory Commission decision remain pending.
The financing plan follows second-quarter results showing Fermi remained in the development stage and had yet to generate revenue, according to its filing with the U.S. Securities and Exchange Commission. Cash and restricted cash totaled $91.7 million at the end of that quarter, before the July note offering. Outstanding debt stood at $520.1 million in the same period, while the company reported a net loss of $25.8 million. In trading before the shareholder letter was released, the stock closed at $2.94 on October 20, according to EL7 data. It had ended the October 19 session at $3.02, putting the latest close below the previous session's close.
Fermi closed an offering of convertible senior notes in July with an aggregate principal amount of $431.25 million, according to a separate SEC filing. The notes carry an annual interest rate of 5.00% and mature in 2031. Net proceeds totaled about $416.81 million after discounts, commissions and estimated expenses. The company allocated about $34.5 million of those proceeds to fund capped call transactions. It said in the filing that the transactions were designed to reduce potential shareholder dilution associated with the convertible notes.
In another change to its financing arrangements, a condition in an equipment financing facility tied to contracting capacity at the Matador project was removed, according to Investing. The condition had required a lease or offtake agreement for 400 megawatts by November 10, 2026. The company said the loan amendment removed potential principal payments of about $22 million during the fourth quarter of 2026. In return, Fermi paid amendment fees totaling $25 million, according to the platform. The fees related to amending the loan agreement, while the potential payments that were removed related to principal repayments during that quarter.
Fermi's strategy targets remaining capacity for 2027 and planned development for 2028, according to the shareholder letter. Management is working to convert prospective customers into definitive contracts as part of that effort. It expects operating cash flows from projects, once operational, to help finance subsequent development stages. It also pledged to provide shareholders with reports on project financing and capital commitments at key execution milestones, according to Investing. Fermi is scheduled to report third-quarter results on November 12, 2026, at 7 a.m. Eastern Time, according to the company's earnings announcement.