Penguin Solutions closes $750M convertible notes offering due 2031

Penguin Solutions, Inc. (Nasdaq: PENG) has closed a private offering of $750.0 million in aggregate principal amount of 0.00% convertible senior notes due August 1, 2031, according to a company statement.

The total includes $100.0 million issued following the full exercise of an option by the initial purchasers, reflecting demand that exceeded the initial offering size. The notes were sold to qualified institutional buyers under Rule 144A and will not bear regular interest or accrete principal.

The company entered into capped call transactions in connection with the offering. With those in place, Penguin Solutions said it anticipates no net dilution from the notes until its share price exceeds approximately $175.05, representing a roughly 125% increase above its closing price at the time of pricing.

Concurrently, the company entered into privately negotiated exchange transactions involving approximately $135.5 million of its 2.00% convertible senior notes due 2029 and $160.0 million of its 2.00% convertible senior notes due 2030. Those exchanges are expected to close on or about July 17, 2026.

Net proceeds will be used to fund the capped call transactions, the cash portion of the note exchanges, and repayment of borrowings under the company's existing credit agreement. Remaining proceeds are designated for general corporate purposes.

CEO Kash Shaikh said the transaction "extends our debt maturities, reduces cash interest expense, and provides additional strategic flexibility." The notes and any shares issuable upon conversion have not been registered under the Securities Act of 1933.

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