Bondholders allege Oracle hid planned tens of billions for AI infrastructure

Bondholders filed a proposed class-action complaint in Manhattan state court on Jan. 14 alleging Oracle concealed preexisting plans to borrow tens of billions of dollars to finance an AI infrastructure buildout tied to a multiyear OpenAI agreement. The suit targets investors who purchased $18 billion of senior notes and bonds Oracle issued on Sept. 25 and accuses the company and several executives of making false or misleading statements in the offering documents.

The complaint, led by the Ohio Carpenters’ Pension Plan, names Oracle Corporation, Chairman Larry Ellison, former CEO Safra Catz, Chief Accounting Officer Maria Smith and 16 underwriting banks as defendants. Plaintiffs assert strict liability under the federal Securities Act of 1933 and seek unspecified damages, saying the offering statements understated or omitted that substantial additional borrowing was already planned and therefore material to investors.

According to the complaint, Oracle announced a roughly $300 billion, five-year agreement to supply computing power to OpenAI roughly two weeks before the Sept. 25 bond sale. The suit alleges that seven weeks after the offering Oracle returned to capital markets to obtain roughly $38 billion in further loans that plaintiffs say were intended to fund construction of two new data centers identified in reporting as being in Texas and Wisconsin.

The plaintiffs argue the offering documents framed future borrowing as a contingency, noting language that Oracle “may” need to borrow more, while in fact the company had concrete plans to raise tens of billions of dollars. The complaint says bondholders were “blindsided” when the larger financing surfaced and that the market reaction reflected heightened perceived credit risk. Plaintiffs contend the prices of the securities they hold fell, yields and spreads widened, and trading levels resembled those of lower-rated companies. The suit also cites a spike in credit‑default‑swap levels to highs not seen since 2009.

The filing places the allegations against a backdrop of significant corporate leverage. The complaint and related materials note Oracle had about $108 billion of outstanding notes and other borrowings as of the end of November, and characterizations in outside reporting have pointed to remaining performance obligations of roughly $523 billion, with about 10 percent convertible to revenue within a year. Some coverage has also linked construction delays and partner withdrawals to investor skepticism, though those operational items remain reported context rather than findings of the complaint.

Market fallout extended to equities, with Oracle shares falling about 5 percent in afternoon trading on the news, according to published trading accounts. One investor also is reported to have taken put positions on the company, underscoring the heightened investor scrutiny.

Oracle did not immediately respond to requests for comment. The complaint will move into pretrial litigation in New York state court, where plaintiffs must prove that offering statements were materially false or omitted required disclosures under the Securities Act. The suit raises broader questions about how technology companies finance large AI investments and the degree of disclosure investors should expect when multibillion‑dollar infrastructure commitments intersect with capital markets.