Meta’s Backstop Is Linchpin for $26 Billion AI Data-Center Deal
(Bloomberg) – Meta Platform Inc. returned to lenders to provide a $ 26 billion debt financing for the construction of a new expanding data center, making a special difference in a heated proposal war for a significant detail: The technology giant Louisiana gave a special guarantee on the Louisiana complex.
Finansman is carried out with a complex arrangement that keeps the debt of Meta’s books away and releases his balance sheet because he continues to push an aggressive pushing to artificial intelligence. The joint venture will actually have a Hyperion facility of 4 million square meters, while Meta will occupy and use the data center under a 20 -year rental.
However, the social media company also presented a sweetener: If it decides to terminate the rental early or prefers to renew it, and the value of the data center falls below a predetermined threshold, and the company will pay back the investors for potential losses compared to those who want to be defined to discuss the terms of the secret agreement.
Such agreements, known as value guarantees, are to protect investors if the basic asset sink is value. However, the use of this substance in such a large data center constitutes a new precedent for people. Considering how to build artificial intelligence infrastructure and how the data center can be used quickly by technological innovations, meta has returned to encourage investors to put tens of billions of dollars.
Teddy Kaplan, who runs the new Mountain Capital’s net rental real estate strategy and did not participate in the commodity agreement, said, “The special nature and high cost of the construction of these data centers was not seen.” “You can see an extraordinarily high technological change that will make these facilities less or even unusable by a future user.”
Meta chose Pacific Investment Management A.Ş. to lead the $ 26 billion debt finance after a month of competition, including some of the largest asset managers supervised by Morgan Stanley. Blue OWL Capital Inc. It contributes to 3 billion dollars of equity for a joint venture.
Representatives of Meta, Pimco, Blue Owl and Morgan Stanley refrained to comment.
Despite the accumulation of AI models and the potential to earn profitable returns by financing the infrastructure required to run them, the relevant risks mean that even the most eager lenders demand special protections.
As technology companies collect wide funds, they will need to finance the AI weapon race – JPMorgan Chase & Co. and Mitsubishi UFJ Financial Group Inc. Currently, they are leading to a debt package of $ 38 billion to pay for data centers connected to Oracle Corp., for example – the arrangement of the commodity can be processed as a template.
Bloomberg News, as he has previously reported, will have a 24 -year tenora of bonds and will take four years for construction before lease payments begin and are expected to receive investment class ratings. Pimco is expected to work with Morgan Stanley to distribute debt parts to other investors in the coming weeks.
Meta said he would make rent payments to the data center according to the power cost he uses. This annual cash flow will finance the interest expense on bonds.
Meta’s guarantee does not apply to future interest payments, and according to one of the people, it is different from the guarantee of companies’ debt to the debt given by their subsidiaries. However, if the value of the data center decreases significantly, it provides some protection to investors.
The planned Hyperion complex is part of the new data center construction wave that is stocked by AI and requires a significant financing. According to an August report, JPMorgan estimates that in 2026 and 2027, a permanent financing of approximately $ 150 billion for data centers.
Before artificial intelligence, the data center financing was “a really different game”, a project finance lawyer at Vinson & Elkins, who did not participate in the commodity agreement, Eamon Nolan. “You didn’t have this $ 30 billion campus,” he said. “There were 20 megawatts here, 20 megawatts. You did not face this tremendous capital intense structure.”
-Help from Natalie Wong and Riley Griffin.
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