Oracle Sued by Bondholders Over Losses Tied to AI Buildout

Core Viewpoint - Oracle is facing a lawsuit from bondholders who allege that the company concealed its need to raise significant additional debt for its artificial intelligence infrastructure, leading to investor losses [1]. Group 1: Lawsuit Details - A proposed class action was filed in a New York state court on behalf of investors who purchased $18 billion of senior notes and bonds issued by Oracle on September 25, shortly after the company signed a $300 billion, five-year contract with OpenAI [2]. - Investors claim they were surprised when Oracle sought $38 billion in loans just seven weeks later to fund data centers in Texas and Wisconsin to support the OpenAI agreement [3]. - The bondholders assert that Oracle's statements in offering documents suggesting the company "may" need to borrow more were misleading, as Oracle was already planning to do so [5]. Group 2: Market Reaction - The bond market reacted negatively to Oracle's additional debt, causing the value of existing bonds to decline and leading to yields and spreads comparable to lower-rated companies due to perceived higher credit risk [4]. - Oracle's notes and bonds were noted to carry low investment grades, which contributed to the market's reaction [4]. Group 3: Legal Accountability - Bondholders, led by the Ohio Carpenters' Pension Plan, claim that Oracle, its executives, and 16 underwriting banks are liable under the federal Securities Act of 1933 for the misleading statements and are seeking unspecified damages [5]. - Oracle has not commented on the lawsuit, and the bondholders' lawyers have not responded to requests for comment [6].