Penguin Solutions, Inc. ("Penguin," "we" or the "Company") today announced it intends to offer $650.0 million in aggregate principal amount of convertible senior notes due 2031 (the "Notes") to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act"), subject to market and other conditions. Concurrently with the offering, the Company expects to enter into privately negotiated exchanges of a portion of certain existing convertible senior notes due 2029 and 2030. The Company also expects to grant to the initial purchasers of the Notes an option to purchase up to an additional $100.0 million aggregate principal amount of Notes.
Penguin Solutions proposes $650M convertible notes offering due 2031.
Option for additional $100M notes if initial purchasers exercise option.
Concurrent exchanges of existing 2029 and 2030 convertible notes.
Notes will be senior, unsecured obligations with semi-annual interest.
Proceeds to fund capped call transactions, repay $100M credit facility, and general corporate purposes.
Company to enter capped call transactions to reduce potential dilution.
The Notes will be senior, unsecured obligations of the Company and will accrue interest payable semi-annually in arrears. The Notes will mature on August 1, 2031, unless earlier converted, redeemed or repurchased. Prior to May 1, 2031, the Notes will be convertible at the option of the holders only upon satisfaction of certain conditions and during certain periods. On or after May 1, 2031, the Notes will be convertible at the option of the holders at any time prior to the close of business on the second scheduled trading day immediately before the maturity date.
Penguin expects to use the net proceeds from the offering to fund the cost of entering into the capped call transactions, pay the cash portion of the consideration for the Existing Notes being refinanced through concurrent exchange transactions, repay $100.0 million outstanding under the credit agreement, and for general corporate purposes. If the initial purchasers exercise their option to purchase additional Notes, Penguin intends to use a portion of the net proceeds from the sale of the additional Notes to pay the cost of entering into additional capped call transactions.
In connection with the pricing of the Notes, Penguin expects to enter into privately negotiated capped call transactions with one or more of the initial purchasers and/or their respective affiliates and/or other financial institutions. The capped call transactions are expected generally to reduce the potential dilution to holders of the Company's common stock upon any conversion of the Notes and/or offset any cash payments Penguin is required to make in excess of the principal amount of converted Notes.
Concurrently with the offering, Penguin Solutions (Cayman), Inc., as issuer of the Existing Notes, and the Company, as guarantor of the Existing Notes, expect to enter into exchange agreements with a limited number of holders of the 2029 Notes and 2030 Notes to exchange a portion of the outstanding Existing Notes for a combination of cash and shares of Penguin's common stock. Following the completion of the offering, Penguin may engage in additional exchanges, or may repurchase or induce conversions, of the Existing Notes.
About Penguin Solutions
Penguin Solutions is a leading provider of memory and AI infrastructure, powering the AI factories of the future for enterprises, sovereign AI initiatives, and neocloud providers. Built on decades of engineering expertise at the intersection of memory and AI/HPC infrastructure, we bring together differentiated infrastructure software, advanced memory, compute systems, end-to-end services, and industry-leading partner solutions in a full-stack AI factory platform designed to help customers deploy and scale AI workloads with speed and precision.
