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.

I think it’s naive to focus on “what is meta getting” from Beignet.

As an example to stimulate your imagination, Walmart has settled as recently as 2019 to resolve liability due to weak internal controls that allowed “third party affiliates” to bribe local officials and others in various ways.

I asked almost this same question a few weeks ago here:

https://news.ycombinator.com/item?id=45628186

But the one thing that doesn’t compute is the commitment. There is a long term obligation now incurred by meta to use this infrastructure. If it’s a capital lease I assume this is now a liability on their books (and disclosures)?

Fade-Dance had a fairly reasonable answer to it:

Maybe they don't want to securitize their core assets and introduce a new favored class of investor. Ex: If they are securitizing their AI data centers as part of the initial capital raise, those investors would be higher up the capital stack. They would get the datacenter in a theoretical bankruptcy before the bond/equity holders got their cut of the liquidation. Intel securitized their new fab builds with Brookfield and Apollo and, as a shareholder at the time, it didn't feel great. No idea what the precedent is regarding Meta by the way, just a thought. Maybe they think that the lenders are a bit "overzealous", and they want to push the risk of things like write down on GPU racks entirely onto external parties who are apparently all too happy to take the risk. I'm guessing it's a mix of both, combined with the fact that we're seeing some copy and paste thinking. This is proving to be a way to get fast access to the huge private credit market. I would assume there must be some very wide deal flow pipes cranking currently, so why not tap into them if the demand is there in the other end.

If the llc declares bankruptcy does meta have to pay the bank for it - or can they buy the assets at fire sale prices?

A lot of comments praising this summary, but I'll criticize it: it's still too verbose, and misses the point.

Meta wants to fund this project, but doesn't want the debt on own its books (because it would impact its vanity AA credit rating). Debt investors are happy to finance a special purpose vehicle guaranteed (in a non debt way) by Meta at a credit rating almost as good as Meta's (say, A). No one is confused this is Meta getting financing for their own project; they've just put it in a wrapper for vanity credit score reasons.

Levine wrote about it and his writing is better than ChatGPT, this snarky website, and obviously mine: https://www.bloomberg.com/opinion/newsletters/2025-10-29/put... .

I don't get why Beignet doesn't also hire Meta and pay it to build the DC.

Thank you, I actually understand what this is all about now.

This is hilarious because I was at the Louisiana public utility commission meeting where the argument was basically it’s Meta borrowing the money so they’re good for it.

reading is really hard. I'm so happy ChatGPT exists

They can get a better interest rate by using a specialty data center lender.

wow, what a great summary.

Very useful, ty

Is Meta actually obligated to repay the loans or not?

That’s how you can decide if this is disingenuous or not. If Meta is obligated to repay the loan and used to synthetic means to get it off the balance sheet that’s a problem.

If they have in fact successfully transferred risk to other parties then that’s what deals like this are for. It’s the whole reason the concept of limited liability exists.

I am fully willing to believe it’s the former. But that’s the test.

"None of this is unusual except for the part where Meta designs, builds, guarantees, operates, funds the overruns, pays the rent, and does not consolidate it."

So ChatGPT put this sentence in list form and reordered it a bit. AGI is imminent!

This might be the first time an explicit ChatGPT response survived being the top comment

I personally think it’s a great response and makes it clearer what’s happening

Times are changing quickly!