Penguin Solutions Closes US$750 Million Convertible Notes Offering to Accelerate AI Infrastructure Growth
AI infrastructure company strengthens balance sheet, extends debt maturities and secures funding to expand its AI Factory Platform amid rising demand for memory and AI computing.
Penguin Solutions, Inc., the AI Factory Platform Company (“Penguin,” “we” or the “Company”) (Nasdaq: PENG), announced that it has closed its previously announced private offering of $750.0 million aggregate principal amount of 0.00% convertible senior notes due 2031 (the “Notes”) to persons reasonably believed to be qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). The $750.0 million aggregate principal amount includes $100.0 million aggregate principal amount of Notes issued in connection with the initial purchasers’ full exercise of their option. Concurrently with the offering, the Company is exchanging a portion of certain existing convertible senior notes due 2029 and 2030 for cash and shares of common stock.
“Demand for memory and AI infrastructure is accelerating as inference and agentic AI workloads move into production at scale,” said Kash Shaikh, CEO of Penguin. “Penguin is strategically positioned at the intersection of these two markets, and our strong third-quarter fiscal 2026 results demonstrated our profitable growth.”
Shaikh added, “This offering extends our debt maturities, reduces cash interest expense, and provides additional strategic flexibility to invest in our AI Factory Platform growth strategy, which is designed to be capital efficient. Investor demand for our oversubscribed convertible notes offering allowed us to secure highly favorable economic terms for Penguin in a transaction that we believe reflect investors’ confidence in our strategy and will enhance our ability to execute and meet historically strong demand.”
Net proceeds are being used to fund the capped call transactions, the cash portion of the convertible note exchanges described below, and the repayment of borrowings under the existing credit agreement. The Company intends to use the remainder of the net proceeds for general corporate purposes consistent with its AI Factory Platform growth strategy.
The Notes are senior, unsecured obligations of the Company, will not bear regular interest and will not accrete principal. The Notes will mature on August 1, 2031, unless earlier converted, redeemed or repurchased. Upon conversion, the Company will settle conversions by paying or delivering, as applicable, cash and, if applicable, shares of its common stock, based on the applicable conversion rate(s).
Concurrently with the offering, the Company entered into separate, privately negotiated transactions with a limited number of holders of Penguin Solutions (Cayman), Inc.’s 2.00% convertible senior notes due 2029 (the “2029 Notes”) and 2.00% convertible senior notes due 2030 (the “2030 Notes” and, together with the 2029 Notes, the “Existing Notes”) to exchange approximately $135.5 million principal amount of the 2029 Notes and $160.0 million principal amount of the 2030 Notes. The convertible note exchanges are expected to be consummated on or about July 17, 2026.
In connection with the pricing of the Notes and the exercise by the initial purchasers of their option to purchase additional Notes, the Company entered into privately negotiated capped call transactions with certain financial institutions.
The Notes and any shares of common stock issuable upon conversion of the Notes or issuable in the exchange transactions described above have not been and will not be registered under the Securities Act or the securities laws of any other jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
This press release shall not constitute an offer to sell or a solicitation of an offer to buy the Notes or any shares of common stock issuable upon conversion of the Notes or issuable in the exchange transactions described above, nor will there be any sale of the Notes or any such shares in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful. This press release does not constitute an offer to exchange or purchase or a notice of redemption with respect to the Existing Notes.
