Fermi AICA Termination Undercuts Project Matador
Fermi AICA Termination unwinds up to $150 million in advance funding and prompted share weakness while the company says lease talks continue.
KEY TAKEAWAYS
- Tenant terminated an AICA for up to $150 million in advance funding; no funds were drawn.
- Loss of pre-funding raises near-term financing and schedule risk for Project Matador's 2026 delivery targets.
- Company cites ongoing lease talks and a signed Electric Service Agreement for initial 86 MW starting Jan. 2026.
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Fermi Inc. (NASDAQ: FRMI) disclosed on December 11, 2025, that a prospective tenant terminated an Advance in Aid of Construction Agreement (AICA) tied to Project Matador. The company said no funds were drawn and lease negotiations with the tenant continue.
AICA Termination and Tenant Negotiations
In September 2025, the prospective tenant signed a non-binding letter of intent (LOI) to lease part of the site. On November 3, the parties executed an AICA providing up to $150 million in advance construction funding. The LOI exclusivity period expired at midnight ET on December 9. Two days later, the tenant notified Fermi of its decision to terminate the AICA, leaving the company without the committed advance funding.
Because no funds were drawn, Fermi avoids an immediate cash impact. However, the loss of pre-funding increases near-term financing and schedule risks for the campus. The company said lease negotiations with the tenant continue under the LOI, and it is also in talks with other potential tenants for 2026 power delivery.
Project Matador Capacity, Contracts, and Permitting
Project Matador spans 5,236 acres near Amarillo, Texas, targeting 11 gigawatts (GW) of power capacity from nuclear, natural gas, and solar resources by 2038, with a 1 GW target by the end of 2026. On December 5, Fermi signed an Electric Service Agreement with Southwestern Public Service Co., an Xcel Energy subsidiary, for an initial 86 megawatts (MW) of capacity starting in January 2026, scaling to 200 MW.
The company has secured permits for 6 GW of gas-turbine power and is advancing Nuclear Regulatory Commission review of a Combined Operating License Application for four AP1000 reactors. It has also secured land, water rights, and local tax incentives in Texas.
Outlook and Analyst Context
Fermi said it remains confident it will meet its expected power delivery schedule at Project Matador, citing strong near- and long-term demand for behind-the-meter AI power. Analysts referenced a prior management estimate that a long-term 1 GW contract starting in 2026 could generate roughly $1.5 billion in annual revenue and about $1.0 billion in net operating income. That projection predates the AICA termination.
Realizing those projections depends on converting current lease negotiations into binding agreements while maintaining permitting and construction progress.
