425: New Era Energy Completes TCDC Acquisition, Partners with Primary Digital

New Era Energy & Digital, Inc. completed its acquisition of the remaining 50% interest in Texas Critical Data Centers LLC and announced a strategic co-development partnership with Primary Digital Infrastructure for a hyperscale data center campus.

Summary

• Acquired SharonAI, Inc.'s remaining 50% equity interest in Texas Critical Data Centers LLC (TCDC) for an aggregate purchase price of $70 million.
• The acquisition consideration includes $10 million in cash (a $150,000 deposit paid on December 29, 2025, and a $9,850,000 delayed payment due by March 31, 2026, or the Capital Closing), $10 million in equity securities to be issued in connection with the company's next equity financing, and a $50 million senior secured convertible promissory note.
• The convertible note matures on June 30, 2026, carries a 10% annual interest rate payable in cash on the maturity date, and is secured by the company's ownership in TCDC and TCDC's assets.
• SharonAI may convert up to $10 million of the convertible note into common stock at a conversion price equal to the 30-day volume-weighted average price (VWAP) prior to conversion, with a floor of $0.87 per share (20% of the $4.33 closing price on January 16, 2026), potentially issuing approximately 11.5 million shares.
• Entered into a strategic partnership with Primary Digital Infrastructure to co-develop the TCDC hyperscale data center campus in Ector County, Texas, aiming for a capacity of 1+ gigawatt.
• Primary Digital Infrastructure will co-sponsor the project, bringing institutional expertise in energy, data center development, and capital markets to secure a hyperscale anchor tenant and arrange complex financing.
• Obtained a Waiver and Consent from ATW AI Infrastructure II LLC, waiving certain terms of a previous Securities Purchase Agreement that would have limited the TCDC acquisition.
• In exchange for the waiver, the exercise price of the First Tranche Warrants held by ATW AI Infrastructure II LLC was reduced to $2.00, allowing for the issuance of up to 5 million shares.
• Agreed to negotiate the issuance of up to $60 million of convertible preferred stock to ATW AI Infrastructure II LLC, subject to a 4.99% ownership cap, and to negotiate certain amendments to existing agreements.

Sentiment

Score: 7

Explanation: The completion of the TCDC acquisition and the strategic partnership with Primary Digital Infrastructure are significant positive developments, validating the company's vision and de-risking a major project. However, the substantial debt, potential future dilution, and the contingency of the ATW preferred stock deal introduce some financial complexities and risks.

Positives

• Completed the acquisition of the remaining 50% interest in TCDC, gaining full ownership and control of a critical digital infrastructure asset.
• Secured a strategic partnership with Primary Digital Infrastructure, a firm with a strong track record in hyperscale data center development and financing, which is expected to de-risk the TCDC project and accelerate its development.
• The TCDC campus is being engineered to support next-generation hyperscale compute needs, featuring both grid and behind-the-meter power generation solutions with significant future expansion potential.
• The partnership with Primary Digital Infrastructure is a powerful validation of the company's vision and is instrumental in bringing the TCDC project to its final completion.
• The waiver from ATW AI Infrastructure II LLC removes potential limitations on the TCDC acquisition, facilitating the transaction.

Negatives

• The acquisition involves a significant $50 million senior secured convertible promissory note, adding to the company's debt obligations.
• The company is obligated to issue $10 million in equity securities from its next equity financing and potentially up to $10 million in common stock from the convertible note, leading to future dilution for existing shareholders.
• The company faces liquidated damages of $200,000 to $300,000 per 30-day period, up to an aggregate of $1,000,000, if it fails to meet deadlines for filing or achieving effectiveness of resale registration statements for the equity issued to SharonAI.
• The agreement to negotiate up to $60 million in convertible preferred stock with ATW AI Infrastructure II LLC is not yet definitive, and failure to close the initial tranche by January 31, 2026, will result in a further reduction of existing warrant exercise prices to $1.00, increasing potential dilution.
• The company needs shareholder approval for equity issuances exceeding the Nasdaq Maximum (19.99%), and failure to obtain it could result in a cash payment obligation to SharonAI in lieu of equity.

Risks

• Failure to obtain shareholder approval for equity issuances exceeding the Nasdaq Maximum (19.99%) could result in a cash payment obligation to SharonAI, Inc. in lieu of equity.
• Inability to secure a hyperscale anchor tenant for the TCDC project could impact its development timeline, funding, and overall profitability.
• Failure to execute definitive documentation and close the initial tranche of the proposed $60 million convertible preferred stock transaction with ATW AI Infrastructure II LLC by January 31, 2026, will trigger a reduction in the exercise price of existing warrants to $1.00, leading to increased potential dilution for shareholders.
• The company faces escalating liquidated damages if it fails to file or achieve effectiveness for the resale registration statements for the equity issued to SharonAI by specified deadlines.
• General risks associated with operating business segments, managing research, development, expansion, growth, and operating expenses.
• The company's ability to compete, directly and indirectly, and succeed in a highly competitive and evolving digital infrastructure industry.
• The company's ability to respond and adapt to rapid changes in technology and customer behavior in the data center and AI infrastructure markets.
• The company's ability to protect its intellectual property and to develop, maintain, and enhance a strong brand in a competitive market.

Future Outlook

New Era Energy & Digital, Inc. anticipates significant progress in the TCDC project, aiming to secure a hyperscale anchor tenant in line with previous guidance. The partnership with Primary Digital Infrastructure is expected to accelerate development and deliver substantial long-term value. The company plans to file an S-3 Registration Statement by January 23, 2026, for its next equity financing and will negotiate the issuance of up to $60 million in convertible preferred stock with ATW AI Infrastructure II LLC by January 31, 2026.

Management Comments

• "We appreciate the support of Sharon AI throughout the development phase of TCDC. Their partnership helped us move the project forward, and we are grateful for their collaboration. This buy-out agreement reflects a constructive outcome for both parties and positions TCDC for its next stage of development as we shift from planning to execution." E. Will Gray II, CEO of New Era Energy & Digital.
• "The formation of our partnership with Primary Digital is a watershed moment for New Era Energy & Digital and a powerful validation of our vision. Their team's unparalleled track record, from developing global data center portfolios to financing multi-billion dollar projects, provides the critical expertise required to execute a development of this scale. This partnership is instrumental in bringing the TCDC project to its final completion." E. Will Gray II, CEO of New Era Energy & Digital.
• "We remain on track to sign a hyperscale anchor tenant in line with our previous guidance, and we believe this development will deliver significant and durable value to our NUAI shareholders and project stakeholders." E. Will Gray II, CEO of New Era Energy & Digital.
• "The next wave of hyperscale and AI infrastructure is being built where power is abundant, flexible, and economically advantaged. This tactical co-development project exemplifies that shift while aligning with our strategy of building portfolios of high quality, risk-mitigated data center assets that are critical to tomorrow's digital economy." Bill Stein, Executive Managing Director and Chief Investment Officer at Primary Digital Infrastructure.
• "With an experienced, well-capitalized partner like New Era, together we will deliver a strategically located, hyperscale-ready campus that is designed to meet the demands of investment grade tenants seeking reliable solutions for their advanced computing needs." Bill Stein, Executive Managing Director and Chief Investment Officer at Primary Digital Infrastructure.

Industry Context

The announcement aligns with the growing trend of developing large-scale, power-intensive data centers in regions with abundant and economically advantageous energy resources, particularly for hyperscale and AI infrastructure. The partnership with Primary Digital Infrastructure, a firm actively involved in multi-gigawatt AI data center projects like the Stargate program (a $15 billion joint venture with Crusoe Energy Systems and Blue Owl Capital), positions New Era Energy & Digital to capitalize on this demand. The focus on integrated power assets and turnkey solutions for hyperscale operators reflects the industry's need for rapid deployment and optimized total cost of ownership in a highly competitive and evolving digital infrastructure landscape.

Comparison to Industry Standards

• Primary Digital Infrastructure's involvement in the Stargate program, a $15 billion joint venture with Crusoe Energy Systems and Blue Owl Capital Corporation, developing a 1.2-gigawatt AI data center campus in Abilene, Texas, demonstrates their capability to attract and deploy institutional capital at scale, securing over $11.6 billion in combined debt and equity financing for that project. This provides a strong benchmark for the TCDC project's potential.
• The TCDC campus's target of 1+ gigawatt capacity is comparable to other major hyperscale and AI-focused data center developments in the United States, indicating a commitment to meeting the demands of leading cloud and AI companies.
• The strategy of locating data centers in regions with abundant, flexible, and economically advantaged power, such as the Permian Basin, is a recognized industry trend for optimizing operational costs and supporting high-density compute.

Corporate Governance

Stakeholder Impact

• Shareholders: Potential for significant long-term value creation from the TCDC project and Primary Digital partnership, but also faces near-term dilution from equity issuances and potential further dilution if ATW's preferred stock deal fails. Shareholder approval is required for certain equity issuances.
• SharonAI, Inc.: Exits its 50% ownership in TCDC, receiving a mix of cash, equity, and a secured convertible note, providing a clear exit strategy and future upside potential through the convertible note.
• ATW AI Infrastructure II LLC: Gains a reduced exercise price on its First Tranche Warrants and the opportunity to invest up to $60 million in convertible preferred stock, strengthening its position as a key investor.
• Primary Digital Infrastructure: Gains a co-sponsorship role in a significant hyperscale data center development, expanding its portfolio and leveraging its expertise.
• Employees (TCDC): The acquisition and co-development suggest continued or expanded operations for TCDC, potentially ensuring job stability and growth opportunities.
• Creditors (Convertible Note): SharonAI, as the holder of the secured convertible note, has a senior secured position on TCDC's assets, providing a degree of protection.

Next Steps

• New Era Energy & Digital, Inc. will use commercially reasonable efforts to file a Registration Statement on Form S-3 by January 23, 2026, for its next equity financing.
• New Era Energy & Digital, Inc. and ATW AI Infrastructure II LLC will negotiate the issuance of up to $60 million of convertible preferred stock and certain amendments to the Securities Purchase Agreement and Existing Warrants, with a deadline of January 31, 2026, for the initial tranche.
• New Era Energy & Digital, Inc. will hold a special meeting of stockholders within 90 days to approve the issuance of common stock in excess of the Nasdaq Maximum (19.99%) if required by Nasdaq rules.
• New Era Energy & Digital, Inc. will file required financial statements and pro forma financial information related to the TCDC acquisition by amendment to the 8-K no later than 71 calendar days after January 16, 2026.
• New Era Energy & Digital, Inc. will work with Primary Digital Infrastructure to secure a hyperscale anchor tenant for the TCDC campus.
• New Era Energy & Digital, Inc. will use commercially reasonable efforts to cause the resale registration statements for the equity issued to SharonAI, Inc. to be declared effective by the SEC within 30 days (or 90 days if SEC review occurs) of the applicable filing deadlines.

Key Dates

Recommendation

The completion of the TCDC acquisition, combined with the strategic partnership with Primary Digital Infrastructure, represents a significant positive catalyst for New Era Energy & Digital. Primary Digital's proven track record in developing and financing multi-gigawatt data centers, as evidenced by their Stargate program, substantially de-risks the TCDC project and enhances its prospects for securing a hyperscale anchor tenant. While there is near-term dilution from the acquisition consideration and potential future capital raises, the long-term value creation potential from a 1+ gigawatt hyperscale and AI data center campus in a power-advantaged region is substantial. The company is positioning itself to meet the rapidly growing demand for next-generation digital infrastructure, making it an attractive long-term investment despite the associated financial complexities.

Keywords

Data Centers, Hyperscale, AI Infrastructure, Digital Infrastructure, Energy Assets, Acquisition, Convertible Note, Equity Financing, Strategic Partnership, Texas Critical Data Centers, Primary Digital Infrastructure, New Era Energy & Digital, NUAI, SharonAI