Bondholders have filed a lawsuit against Oracle Corporation, claiming they suffered financial losses due to the company's failure to disclose its need for significant additional debt to develop AI infrastructure. The proposed class action was filed in a New York state court in Manhattan on behalf of shareholders who acquired $18 billion of notes and bonds issued in September.
This legal action comes two weeks after Oracle announced a five-year contract to supply Microsoft-backed OpenAI in a $300 billion deal. Investors named in the suit assert they were not informed when Oracle returned to capital markets just seven weeks later to seek $38 billion in loans to support its OpenAI collaboration.
"The bond market's reaction to Oracle's additional debt was swift and bracing," the bondholders cited in their complaint.
On the same day, KeyBanc Capital Markets reaffirmed an 'Overweight' rating and $300 price target on Oracle Corporation. The firm's assessment suggests that either one or both of Oracle's distinct segments are being undervalued, resulting in the conclusion that Oracle's stock overall remains attractive.
Oracle Corporation, incorporated in 1977 and based in Texas, provides solutions for enterprise information technology environments. The company offers Oracle Cloud SaaS, cloud-based industry solutions, Oracle Cloud license and on-premise license, and Oracle license support services.