Penguin Solutions prices $650M convertible notes due 2031

Penguin Solutions, Inc. (Nasdaq: PENG) has priced $650.0 million in aggregate principal amount of 0.00% convertible senior notes due August 1, 2031, to be sold to qualified institutional buyers under Rule 144A. The offering is expected to close on or about July 17, 2026, subject to customary closing conditions.

The notes carry no regular interest and will not accrete in principal value. The initial conversion rate is set at 8.5690 shares per $1,000 principal amount, equivalent to a conversion price of approximately $116.70 per share, representing a 50% premium over the July 14, 2026 closing price of $77.80 per share. The company has granted initial purchasers an option to purchase up to an additional $100.0 million in notes within 13 days of issuance.

Penguin estimates net proceeds of approximately $636.9 million, or approximately $735.1 million if the overallotment option is fully exercised. The company plans to allocate approximately $42.6 million to fund capped call transactions, $298.1 million to pay the cash portion of concurrent exchange transactions involving existing 2029 and 2030 convertible notes, and $100.0 million to repay amounts under an existing credit agreement. The remainder is earmarked for general corporate purposes.

Concurrent with the offering, Penguin Solutions (Cayman), Inc. expects to exchange approximately $135.5 million of its 2.00% convertible notes due 2029 for roughly $136.7 million in cash and approximately 4.7 million common shares, and $160.0 million of its 2.00% convertible notes due 2030 for approximately $161.4 million in cash and approximately 4.0 million common shares.

In connection with the pricing, Penguin entered into capped call transactions with certain financial institutions. The cap price is set at $175.05 per share, representing a 125% premium over the July 14, 2026 closing price. The capped call transactions are intended to reduce potential dilution upon conversion of the notes up to the cap price level.

The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933 and may not be offered or sold in the United States without registration or an applicable exemption.

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