The deal raises concerns over how OpenAI will meet the commitments it has made to pay for computing resources which include: $250 billion to Microsoft, $300 billion to Oracle, $22.4 billion to Coreweave and an unknown commitment to Google Cloud.
According to OpenAI CEO Sam Altman, the company’s commitments for spending on computer power amount to $1.4 trillion.
To pay for these commitments OpenAI has $13 billion in expected revenue this year.
Venture money, debt and an IPO are seen as the only possibilities to fund the shortfall with debt as the main vehicle for the moment.
To that end, lenders have been using creative ways to lend money to companies by keeping it off their balance sheets using SPVs (Special Purpose Vehicles).
By keeping debt off balance sheet, companies can raise even more debt via the conventional company borrowing route of corporate bonds.
That was the way Enron could go so spectacularly bust.
One example of the SPV in the AI world is Meta borrowing $60 billion to spend on datacentres – $30 billion of which will be in an SPV raised through the alternative investment asset management company Blue Owl Capital.
Another example is Elon Musk’s $20 billion proposed SPV for xAI where Valor Equity Partners and Apollo Global Management fund an entity which spends $20 billion on Nvidia chips then hires them out them to xAI which is liable for nothing except the rent on the chips.
Ingenious fellows these financial types inventing new forms of pass the parcel. Hopefully it will not end up with the taxpayer as it did in 2009.
