alt Hacker NewsMeta hiding $27B in debt using advanced geometry
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I asked ChatGPT to make this more readable since it's a mix of satire and actual information:
(Clarification: I used a diabrowser.com feature to clarify the article, which uses ChatGPT underneath)
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Meta wants to build a huge AI data center campus in Louisiana. It costs about $28–29 billion. Instead of just borrowing the money itself and putting the debt on its own balance sheet, Meta uses a maze of LLCs and contracts to:
- Get $27.3 billion of debt raised by a special company called Beignet Investor LLC (80% owner of the project).
- Keep that debt off Meta’s official balance sheet, even though:
▫ Meta designs the campus,
▫ pays for overruns,
▫ pays the rent,
▫ guarantees the value at the end,
▫ and will basically be the only user.
In real life, this is basically Meta borrowing to build its own data center. On paper, it’s “someone else’s” debt.
Why is this off-balance-sheet?
The accounting rules say you only have to put an entity on your balance sheet if you “control” it and take on most of the risk/benefit.
Meta’s position is: “We don’t control this JV company, even though we do all the important things and take on all the risk.”
The rating agency in the piece is mocking this. They list all the ways Meta obviously controls and supports the project, then say: under current accounting rules, if Meta insists it doesn’t control it, we all politely pretend that’s true. So the $27B debt doesn’t show up on Meta’s balance sheet, even though economically it’s Meta’s problem.
There are better articles explaining this: https://www.forbes.com/sites/petercohan/2025/11/25/metas-ai-... and https://www.wsj.com/tech/meta-ai-data-center-finances-d3a6b4...
A quote from The Information via Matt Levine:
> The bonds for the Hyperion data center priced with a coupon of almost 6.6%, roughly a percentage point higher than Meta’s outstanding corporate bonds and in line with the average junk bond. That’s a higher yield than investors would expect given that S&P rated the Hyperion bonds A+, safely within the investment-grade spectrum.
Apparently the bond market is pricing the guarantees made by Meta to this other entity as not quite as good as bonds that Meta issues itself, and Meta is willing to pay the higher interest rate. So, not entirely a free lunch?
I guess sometimes a company wants to issue junk bonds and its rating gets in the way.
> This treatment is considered acceptable because the people who decide what is acceptable have accepted it.
Wasn't that the root of the 2008 crash? The debt spiral was acceptable because people were making enough money in the present that regulators were powerless to advise against it. In a sane world people often go to jail for decades when doing this at pennies on the dollar.
Relevant excerpts to understand what's at play here:
> (…) this is functionally Meta borrowing $27.30 billion for a campus no one else will touch, packaged in legal formality precise enough to satisfy the letter of consolidation rules and absurd enough to insult the spirit.
> The structure maintains a precarious technical separation that, under current interpretations of accounting guidance, allows Meta to keep roughly $27 billion of assets and debt off its own balance sheet while continuing to provide every meaningful form of economic support.
This is hardly a secret. Matt Levine blogged about it: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put...
It’s buried in the article but this about a debt vehicle created to finance a “2.064 GW hyperscale data center campus”. That’s approximately equivalent to a One-Third-Gorges Dam (one tenth of the Three Gorges Dam.)
Downstream of the capex to build the data centre is, presumably, a sister capex to build a power station. At what stage do these come hand in hand? Or does this financing include provisions to pay the electricity bills for the next ten years which, in turn, gets used by the power company to finance the construction of a new power plant? The power company gets some kind of heads up?
If I finance the construction of a mile long dinner table due for late November 2026, presumably some of that had to trickle down into a local turkey farm, lest everyone go hungry?
This have been covered by FT a while ago: https://archive.ph/zs7ul ( https://www.ft.com/content/d0344253-b0a2-4c6d-8b97-520243678... )
Levine wrote about this here: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... .
Unfortunately I didn't find a mention of any mathematical geometry in the article.
LOL "The entity is named “Beignet,” presumably because “Off-Balance-Sheet Leverage Vehicle No. 5” tested poorly with focus groups."
Monroe LA is the former headquarters of Lumen, they realized that their corporate headquarters was a white elephant and donated it to the local university I think. However that means there is available power capacity from the local power company and of course, fair amounts of fiber optic cable nearby.
Serious questions: won't banks and ratings agencies simply treat this as Meta's debt since it it effectively Meta's debt? What changes if this was on their "official balance sheet"? How does playing with the wording actually help Meta overall?
It seems to me that the lengthiness and opacity of the report is part of the joke, and therefore running it through ChatGPT kind of misses the point. (The "FSG analyst" would have intentionally spread a layer of BS on top of everything to make it a lot of extra work to understand that the debt should actually be on Meta's books. Of course it's satirical so it calls out its own absurdity instead of actually burying it.)
As has been mentioned though if you purely want the info there are more succinct articles out there, e.g.: https://www.forbes.com/sites/petercohan/2025/11/25/metas-ai-...
Soo they just borrowed money from themselves to pay for their data center? Nice.
Folks in the comments here begging ChatGPT to teach them how to read
even a really strong shot of cafe bustelo failed to make this an interesting read.
Can anyone comment about how common this (apparently legal) practice is?
> The Outlook is Superficially Stable, defined here as “By outward appearances stable unless, you know, things happen. Then we’ll downgrade after the shit hits the fan.”
remember that time Facebook spent $10s of billions on the metaverse?
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It would be deeply ironic if this data center (or similar ones using creative accounting), are among those featured in the TV commercials Meta has been running in expensive national prime time slots in recent weeks.
I've seen at least two different commercials each focused entirely on the personal story of a relatable, folksy person living in a small town in a fly-over U.S. state, talking about how the town was declining and times were hard - then Meta built a new data center nearby and this person along with many others got jobs there and now things are great. They are very well-produced with cinematic shots of rustic small-town main streets, dusty pickup trucks in rural settings and local high school football games. Aside from the obvious brand-washing, it would be extra on-brand if it turns out Meta doesn't even own the data center but still tries to take credit for it.