Oracle was sued by bondholders for losses related to AI expansion

NEW YORK, Jan 14 (Reuters) – Oracle was sued on Wednesday by bondholders who say they suffered losses because the company, chaired by billionaire Larry “Ellison,” failed to disclose that it needed to sell significant additional debt to expand its business artificial intelligence Infrastructure.

The proposed class action lawsuit was filed in a New York state court in Manhattan on behalf of investors who purchased $18 billion in notes and bonds that Oracle issued on Sept. 25, two weeks after Oracle announced a five-year, $300 billion deal OpenAI with computing power.

Those investors said they were blindsided when Oracle returned to capital markets seven weeks later to raise $38 billion in loans to finance two data centers in support of the OpenAI protocol.

“The bond market’s reaction to Oracle’s additional debt was swift and forceful” as prices fell and yields on Oracle’s debt rose because investors saw greater credit risk, bondholders said.