Comment Oracle's New Mexico "Project Jupiter" in trouble (Score 2, Interesting) 49
From: Oracle Wants Protection If Its AI Data Center Is Delayed. Here's What That Changes for Investors.
Bloomberg reported that Oracle has sent a legal notice to the developer of its $X billion "Project Jupiter" AI data center campus scheduled to come online in 2028. It cites "force majeure," a contract provision that offers protection if events outside of a company's control disrupt a deal -- in this case, the delay of a critical natural gas pipeline.
Oracle is hoping to delay rent payments if the data center is not delivered by the deadline. The developer, a subsidiary of Blue Owl Capital, must first agree that a qualifying event occurred, and Oracle would still be on the hook for certain fees and other payments.
While Oracle insists the project is on schedule, investors are growing increasingly worried. The $18 billion in project financing for Poject Jupitor have fallen into "stressed" territory. That means the banks that loaned the money are willing to let them go for considerably less than they are worth in name, fearing the loans may go bad. The Financial Times reported that as of last Friday, they had fallen to around 89 to 91 cents on the dollar.
That's in part due to the stiff local opposition the 1,400-acre campus is facing. Residents are concerned with the environmental impact as well as noise pollution -- a common theme from projects around the country. A recent poll by the Albuquerque Journal found 65% opposed to their construction in the state.
The company has had trouble with regulators as well. The plan to bring natural gas to the site was blocked by the state's land office, so was a revised plan.