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OpenAI will receive a  billion revolving line of credit on top of the latest funding

OpenAI will receive a $4 billion revolving line of credit on top of the latest funding

OpenAI has a $4 billion revolving credit line, bringing its total liquidity to more than $10 billion, CNBC has learned. It follows Wednesday’s news that OpenAI closed its recent funding round at a valuation of $157 billion, including the $6.6 billion the company raised from a wide selection of investment firms and major technology companies.

JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS and HSBC all participated.

The base credit line is $4 billion, with an option to increase it by an additional $2 billion. The loan is unsecured and can be tapped over the course of three years. OpenAI’s interest rate is equal to the Secured Overnight Financing Rate (SOFR) plus 100 basis points. SOFR, a measure of the cost of borrowing cash overnight, was just over 5% at the beginning of this week, meaning OpenAI would pay about 6% on the money it borrows immediately.

“This means we now have access to more than $10 billion in liquidity, giving us the flexibility to invest in new initiatives and operate with full agility as we scale,” OpenAI wrote in a blog post on Thursday, adding that it company plans to use the money to invest in research and products, expand infrastructure and attract talent. “It also validates our partnership with an exceptional group of financial institutions, many of whom are also OpenAI customers.”

OpenAI’s latest funding round included a wide selection of investment firms and major technology companies. Led by Thrive Capital, which planned to invest $1 billion, attendees included existing financier Microsoft and chipmaker Nvidia. SoftBank, Khosla Ventures, Altimeter Capital, Fidelity Management & Research Company, MGX and Tiger Global also participated, according to sources familiar with the situation.

The meteoric rise of OpenAI, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry in recent years, pushing the concept of generative artificial intelligence into the mainstream and paving the way for tens of billions of dollars of investments in AI infrastructure. Earlier this year, OpenAI was valued at a reported $80 billion, up from $29 billion in 2023.

OpenAI generated $300 million in revenue last month, a 1,700% increase since the beginning of last year, CNBC confirmed last week, following reporting by The New York Times. The company expects to bring in $11.6 billion in revenue next year, up from $3.7 billion in 2024, according to a person close to OpenAI who asked not to be named because the financials are confidential.

But all that revenue is extremely expensive, because OpenAI must ramp up purchases of Nvidia’s graphics processing units (GPUs) to train and run its large language models. The company expects to lose about $5 billion this year, the person said. Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant strengthens its Azure cloud business.

OpenAI has also seen many growing pains in recent months, including the loss of key executives, a trend that continued last week with the departures of CTO Mira Murati, research chief Bob Mcgrew and research VP Barret Zoph.

OpenAI held an all-hands meeting last Thursday following the board’s decision to consider restructuring the company into a for-profit company, according to a person with knowledge of the matter, who said that if the change were to happen, the nonprofit segment if a company were to continue to exist. separate entity.

During that meeting, Altman denied reports of plans for him to acquire a “gigantic equity stake” in the company, calling that information “simply not true,” according to a person present.

OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board has discussed the issue, no specific numbers are on the table.

“The board has had discussions about whether it would be beneficial to the company and our mission to compensate Sam with equity, but no specific numbers have been discussed and no decisions have been made,” Taylor said.