The apprehension investors have surrounding Oracle now seems to affect its data center projects in addition to its stock prices. Asset management firm Blue Owl Capital pulled out from Oracle’s $10 billion data center project over unfavorable debt terms, according to the Financial Times as concerns arise about the company’s amount of debt.
Blue Owl, Oracle’s biggest data center partner, had been in discussions with lenders and Oracle for the deal to invest in a massive facility in Michigan.
Oracle spokesperson Michael Egbert said in a statement to Yahoo Finance that its development partner, Related Digital, “selected the best equity partner from a competitive group of options, which in this instance was not Blue Owl.”
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Blue Owl has been a prominent player in the AI data center boom, partnering with Oracle on its data center projects in Texas and New Mexico, as well. It had also entered a deal with Meta to help finance its massive facility in Louisiana.
This development exacerbated worries that Oracle would delay the completion of data centers for OpenAI. According to Bloomberg, Oracle will complete data centers in 2028 rather than 2027. A shortage of labor and materials has been cited as the reason for delay. Oracle pushed back against the report.
“Site selection and delivery timelines were established in close coordination with OpenAI following execution of the agreement and were jointly agreed,” an Oracle spokesperson said in an email to CNBC. “There have been no delays to any sites required to meet our contractual commitments, and all milestones remain on track.”
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Oracle’s stock fell more than 5% on Wednesday after Blue Owl’s move. With this decline, shares are down nearly 18% for the month. The stock fell after the company’s earnings last week showed its costs rising more than expected while the company lost more cash than investors anticipated. Investor fears have also grown after the tech firm’s $248 billion in lease obligations was revealed in its SEC filings. Its overreliance on OpenAI to meet its ambitious revenue targets has also raised concerns among shareholders.
While Oracle executives said after its earnings results that the company is committed to maintaining an investment-grade credit rating — it currently has a BBB rating on its bonds — investors haven’t been so sure. This has been piling into Oracle credit default swaps that saw spreads reach their highest level last week since 2009.