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The plaintiffs purchased Oracle bonds during an $18 billion bond offering in September. This happened just two weeks after Oracle announced a $300 billion partnership with OpenAI to supply computing resources for artificial intelligence projects.
However, only seven weeks after the initial bond sale, Oracle returned to the financial markets to raise an additional $38 billion to fund the construction of two data centers as part of the OpenAI deal.
The investors argue they were not prepared for this move. They say the bond market responded quickly and severely: bond prices dropped, and the yields and spreads on Oracle’s bonds rose to levels similar to those of companies with lower credit ratings. Reuters points out that Oracle’s bonds were previously rated as investment-grade.
The plaintiffs claim that Oracle’s statements in the bond offering documents, which suggested the company might need to borrow more money in the future, were untrue and deceptive. They argue that Oracle had already planned to do so at the time the bonds were issued.
source: reuters.com
However, only seven weeks after the initial bond sale, Oracle returned to the financial markets to raise an additional $38 billion to fund the construction of two data centers as part of the OpenAI deal.
The investors argue they were not prepared for this move. They say the bond market responded quickly and severely: bond prices dropped, and the yields and spreads on Oracle’s bonds rose to levels similar to those of companies with lower credit ratings. Reuters points out that Oracle’s bonds were previously rated as investment-grade.
The plaintiffs claim that Oracle’s statements in the bond offering documents, which suggested the company might need to borrow more money in the future, were untrue and deceptive. They argue that Oracle had already planned to do so at the time the bonds were issued.
source: reuters.com