The BareStory
Oracle's stock experienced a decline of approximately 5% on Wednesday following a report that Blue Owl Capital had withdrawn from discussions to provide funding for a $10 billion data center. The proposed facility in Saline Township, Michigan, is intended for use by OpenAI.
In response, Oracle issued a statement asserting that the project is proceeding on schedule. An Oracle spokesperson, Michael Egbert, said the company's development partner, Related Digital, had selected a different equity partner and that final negotiations were moving forward. Oracle did not name the new firm involved in the equity talks.
A report, citing individuals familiar with the situation, suggested the plans with Blue Owl did not proceed due to concerns regarding Oracle's increasing debt and significant spending on artificial intelligence. A person familiar with Blue Owl's thinking reportedly stated the firm withdrew because of unfavorable debt terms and concerns that local politics could delay construction. The same source also noted Blue Owl remains involved in two other Oracle data center projects.
The stock drop on Wednesday contributed to shares being down about 50% from a peak reached in September. As of November 30, a company filing indicated Oracle had $248 billion in lease and cloud capacity commitments. By the end of that month, its total debt, including operating lease liabilities, was reported to be over $124 billion. Separately, a report stated that Blackstone is in discussions as a potential replacement for Blue Owl as a financial partner, though no agreement has been finalized.
How it may affect me
As a U.S. reader:
• The drop in Oracle's stock price can affect the value of investment portfolios and retirement accounts that hold the company's shares.
• Potential delays to the Michigan data center, cited over financing and political concerns, could impact the timing of expected local jobs and economic activity.
• Any disruption to the data center, intended for OpenAI's use, could eventually affect the capacity or development of widely used artificial intelligence services.
