OpenAI Secures $4 Billion Revolving Credit Line, Boosting Its Liquidity to Over $10 Billion

• OpenAI has secured a $4 billion revolving credit line, increasing its total liquidity to over $10 billion, following the successful completion of its long-awaited funding round yesterday.
• All the major banks, including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC, participated.
• On Wednesday, OpenAI concluded its latest funding round with a valuation of $157 billion, having raised $6.6 billion from investors such as Thrive Capital, Microsoft, Nvidia, and SoftBank.

OpenAI has secured a $4 billion revolving line of credit, increasing its total liquidity to over $10 billion, CNBC reports. This news comes after it was announced on Wednesday that OpenAI raised $6.6 billion in its latest funding round, valuing the company at $157 billion.

All the major banks, including JPMorgan Chase, Citi, Goldman Sachs, Morgan Stanley, Santander, Wells Fargo, SMBC, UBS, and HSBC, participated.

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

""With over $10 billion in liquidity, we can now invest in new initiatives and operate with full agility as we scale. We plan to use this money for research and product development, infrastructure expansion, and talent acquisition. This also strengthens our partnership with a remarkable group of financial institutions, many of whom are also OpenAI customers," OpenAI stated in a Thursday blog post."

The latest funding round for OpenAI was led by Thrive Capital, with Microsoft and Nvidia among the investors. Additionally, SoftBank, Khosla Ventures, Altimeter Capital, Fidelity Management & Research Company, MGX, and Tiger Global also participated, according to sources.

OpenAI's rapid growth, starting with the launch of ChatGPT in late 2022, has been the biggest tech industry story in recent years, popularizing the idea of generative artificial intelligence and leading to billions of dollars in investments in AI infrastructure. This year, OpenAI's valuation increased to $80 billion from $29 billion in 2023.

OpenAI generated $300 million in revenue last month, up 1,700% 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 sales 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.

OpenAI's large language models require a significant amount of training and running, which is extremely costly. The company is expected to lose about $5 billion this year due to the high cost of purchasing Nvidia's graphics processing units (GPUs). Microsoft has invested billions of dollars in OpenAI and is a key partner as the software giant strengthens its Azure cloud business.

In recent months, OpenAI has faced numerous challenges, including the departure of key executives such as CTO Mira Murati, research chief Bob McGrew, and research VP Barret Zoph.

Last Thursday, an all-hands meeting was held at OpenAI after the board decided to consider restructuring the company as a for-profit business. A source with knowledge of the matter stated that if the change happens, the nonprofit segment will remain as a separate entity.

At the meeting, Altman refuted rumors of receiving a significant equity stake in the company, stating that the information was false, according to a source present.

Last week, CNBC reported that OpenAI Chairman Bret Taylor stated that although the board has discussed the issue, no specific numbers have been disclosed.

Taylor stated that the board has discussed the possibility of compensating Sam with equity, but no specific figures have been discussed and no decisions have been made.