Oracle Bondholders Sue Over Undisclosed AI Borrowing Plans
Oracle shares dropped 5% following a lawsuit filed by bondholders alleging the company concealed plans for significant AI-related borrowing. The legal action, initiated in a New York state court, centers on $18 billion of senior notes and bonds issued on September 25. Investors claim Oracle failed to disclose its imminent need for additional debt to fulfill a $300 billion computing power agreement with OpenAI.
The controversy escalated seven weeks later when Oracle secured $38 billion in loans to construct data centers in Texas and Wisconsin—projects directly linked to the OpenAI contract. Bondholders argue this undisclosed borrowing eroded the value of their investments, causing bond prices to plummet and yields to spike. The Ohio Carpenters’ Pension Plan leads the proposed class action, asserting the market reaction was immediate and severe as credit risk assessments shifted overnight.
