Oracle was sued this Wednesday by holders of the company’s debt who say they suffered losses because the company chaired by billionaire Larry Ellison did not disclose that it needs to draw on more significant financing to build its artificial intelligence infrastructure.
The class action lawsuit was filed in Manhattan on behalf of investors who purchased $18 billion in notes and debt securities issued by Oracle on September 25, two weeks after Oracle announced a five-year, $300 billion contract to provide data processing infrastructure to OpenAI.
These investors said they were caught off guard when Oracle returned to the capital markets seven weeks later to obtain $38 billion in loans to finance two data centers needed to fulfill the OpenAI contract.
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‘The bond market’s reaction to Oracle’s additional debt was swift’ and prices fell and interest rates rose as investors perceived greater credit risk, bondholders said.
According to the complaint, Oracle, Ellison, former chief executive Safra Catz, and chief accounting officer Maria Smith are responsible for false and misleading statements in the offering documents for the $18 billion debt sale.
Oracle did not immediately respond to a request for comment.
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