OpenAI gets $4 billion revolving credit line, giving it more than $10 billion in liquidity

OpenAI has a $4 billion revolving line of credit, bringing its total liquidity to more than $10 billion, CNBC has learned. It follows news Wednesday that OpenAI closed its recent funding round at a valuation of $157 billion, including the $6.6 billion the company raised from an extensive roster of investment firms and big tech 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 plus 100 basis points. SOFR, a measure of the cost of borrowing cash overnight, sat at just over 5% as of early this week, meaning OpenAI would be paying roughly 6% on money that it borrows right away.

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

OpenAI‘s latest funding round included an extensive roster of investment firms and big tech companies. Led by Thrive Capital, which planned to invest $1 billion, investors included existing backer Microsoft as well as chipmaker Nvidia. SoftBank, Khosla Ventures, Altimeter Capital, Fidelity Management & Research Co., MGX and Tiger Global also participated, according to sources familiar with the situation.

OpenAI’s rapid ascent, which began with the launch of ChatGPT in late 2022, has been the biggest story in the tech industry over the last couple of years, bringing 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, 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.

But all that revenue is extremely costly, as OpenAI has to ramp up purchases of Nvidia’s graphics processing units 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 bolsters its Azure cloud business.

In an on-air appearance Thursday, OpenAI CFO Sarah Friar said of the restructuring rumors, “We have discussed this, that we are looking into how we restructure from here.”

Later, Friar added, “We just want to be kind of a more traditional company. Why make things complicated that don’t need to be complicated? We need to make sure we can continue to get investments so that we are a sustainable, long-term participant in this ecosystem, and we want to make sure it’s a company that works for all of our stakeholders.”

OpenAI has also experienced plenty of growing pains in recent months, including the loss of key executives, a trend that continued through last week with the departures of CTO Mira Murati, research chief Bob McGrew and Barret Zoph, research vice president.

OpenAI held an all-hands meeting last Thursday following the board’s decision to consider restructuring the company to a for-profit business, according to a person with knowledge of the matter, who said that should the change occur, the nonprofit segment would remain as a separate entity.

At that meeting, OpenAI CEO Sam Altman denied reports of plans for him to receive a “giant equity stake” in the company, calling that information “just not true,” according to the person, who was in attendance.

OpenAI Chairman Bret Taylor told CNBC in a statement last week that while the board has talked about the matter, no specific figures are on the table.

“The board has had discussions about whether it would be beneficial to the company and our mission to have Sam be compensated with equity, but no specific figures have been discussed nor have any decisions been made,” Taylor said.

When asked about whether the company will eventually go public, Friar told CNBC Thursday in the same on-air appearance that the company has “really big aspirations of, ‘How do we keep investing and what drives this technology?’ It’s compute first, and it’s not cheap. It’s great talent second, and then, of course, it’s all the normal operating expenses of a more traditional company.”

Friar added, “To that end, we do want to get make sure we’re being creative in where we can go to tap capital. To your point, sometimes that’s public markets, sometimes that’s debt markets, sometimes it’s project finance, structured finance. There’s a lot of things that I need to get my kind of fingers into as I look forward over the next several quarters.”