Pre-market plummet, Oracle suddenly issued a "force majeure" notice due to concerns over the $300 billion data center project delay

Author: Bu Shuqing, Wall Street Journal

Oracle invoked the force majeure clause in an attempt to build a financial firewall for its massive data center project in New Mexico. This move adds uncertainty to the already troubled Project Jupiter and quickly transmits pressure throughout the entire financing chain.

According to Bloomberg, Oracle has issued a formal notice invoking the force majeure clause to the project developer—Stack Infrastructure, a subsidiary of Blue Owl Capital.

The report states that Oracle's action is not intended to withdraw from its position as a major tenant but seeks to postpone related payment obligations in the event that the project cannot go live as originally planned in 2028.

Following the announcement, Oracle's stock price fell 4% in pre-market trading, while Blue Owl Capital's stock dropped 2.3%, and data center energy provider Bloom Energy also saw a pre-market decline of 4.4%.

Project Jupiter is a large special purpose vehicle (SPV) project planned to build four data centers on approximately 1,400 acres of land in New Mexico, providing a total of $300 billion in computing power for OpenAI. The financing structure includes bonds, loans, and equity from Blue Owl. The issuance of this force majeure notice has heightened market concerns about whether the project can proceed as scheduled, with related loans already having fallen to pressured levels.

Force Majeure Notice: Defensive Operation, Legal Effect in Doubt

According to Bloomberg citing informed sources, the core purpose of the notice issued by Oracle to Stack Infrastructure is to establish a contractual protection position for itself in the event of construction delays, in order to postpone potential payment obligations.

Companies invoking force majeure clauses typically seek legal grounds to be exempted from or to defer contractual obligations when faced with unforeseen circumstances beyond their control. However, sources also pointed out that it is currently uncertain whether this action can actually exempt Oracle from its previously committed financial responsibilities.

In response, an Oracle spokesperson stated, "Project Jupiter is still progressing as planned, and we are firmly committed to New Mexico and confident in the project's prospects." The spokesperson did not provide specific comments on the force majeure notice itself. Blue Owl declined to comment.

Project Already in Trouble, Pressure on Financing Chain Fully Evident

Before the issuance of this notice, Project Jupiter was already facing resistance from multiple parties. According to previous reports by Bloomberg, the project encountered opposition and regulatory setbacks, with related loans having fallen to pressured levels.

From the project structure perspective, Project Jupiter operates as an SPV, which is an off-balance-sheet financing arrangement that bundles bonds, loans, and Blue Owl equity together, involving several large financial institutions. This highly leveraged financing structure means that any loosening in one link could trigger a chain reaction throughout the entire funding chain.

After the issuance of the force majeure notice, the market reacted quickly: Oracle, Blue Owl Capital, and Bloom Energy all saw significant declines, indicating that investor concerns about the project's prospects have spread from core participants to surrounding supply chains.

2028 Launch Goal Cast in Shadow, Project's Fate in Doubt

Informed sources indicated that the direct trigger for Oracle's issuance of the force majeure notice was the uncertainty regarding whether Project Jupiter can commence operations as originally planned in 2028. The project had previously been hindered by opposition and regulatory obstacles, and Oracle's defensive move further exacerbated external doubts about the project's viability.

Market commentators pointed out that the SPV structure of Project Jupiter deeply binds the interests of several top financial institutions, and any substantial delay or suspension of the project could lead to significant ripple effects.

Currently, Oracle insists that the project is "progressing as planned," but the gap between its invocation of the force majeure clause and this statement has kept investors on high alert.