Penguin Solutions plans $650M convertible notes offering due 2031

Penguin Solutions, Inc. (Nasdaq: PENG) announced plans to offer $650.0 million in aggregate principal amount of convertible senior notes due 2031 to qualified institutional buyers under Rule 144A of the Securities Act of 1933.

The company also granted initial purchasers an option to buy up to an additional $100.0 million in aggregate principal amount of notes, exercisable within 13 days of the initial issuance date. The notes will mature on August 1, 2031, and will accrue interest payable semi-annually.

Concurrently, Penguin Solutions expects to enter into privately negotiated exchange agreements with a limited number of holders of its existing 2.00% convertible senior notes due 2029 and 2.00% convertible senior notes due 2030, exchanging a portion of those notes for a combination of cash and shares of common stock.

The company said it intends to use net proceeds to fund capped call transactions, pay the cash portion of consideration for the existing notes being refinanced, and repay $100.0 million outstanding under its credit agreement. Remaining proceeds would be used for general corporate purposes.

The notes will be redeemable at Penguin's option on or after August 6, 2029, provided the last reported sale price per share of common stock exceeds 130% of the conversion price for a specified period. The redemption price would equal the principal amount plus accrued and unpaid interest.

In connection with the offering, Penguin expects to enter into capped call transactions intended to reduce potential dilution to existing common stockholders upon conversion of the notes. The interest rate, initial conversion rate, offering price, and other terms have not been finalized and will be determined at pricing.

The notes and any shares issuable upon conversion have not been registered under the Securities Act and may not be offered or sold in the United States without registration or an applicable exemption. The information is based on a statement from Penguin Solutions.

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