Penguin Solutions sells $750M 0% convertible notes
Penguin Solutions, Inc. issued $750.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031 in a private Rule 144A offering.
Rhea-AI Filing Summary
Penguin Solutions, Inc. issued $750.0 million aggregate principal amount of 0.00% Convertible Senior Notes due 2031 in a private Rule 144A offering. The notes bear no regular interest, mature on August 1, 2031, and are convertible into cash and, if applicable, common stock at an initial rate of 8.5690 shares per $1,000 (conversion price about $116.70 per share), with issuer redemption and holder repurchase rights tied to “fundamental change” events and stock price thresholds.
The company expects net proceeds of approximately $735.1 million, to be used to repurchase $135.5 million of 2.00% convertible notes due 2029 and $160.0 million of 2.00% convertible notes due 2030 for cash plus approximately 4.7 million and 4.0 million shares of common stock, respectively, repay $100.0 million under its credit agreement, and fund $49.1 million of capped call transactions with an initial cap price of $175.05 per share. Initially, a maximum of 9,640,050 shares may be issued upon conversion based on the maximum conversion rate, while the capped calls are expected generally to reduce potential dilution and/or offset cash payments above principal upon conversion, subject to the cap.
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0.00% Convertible Senior Notes due 2031 financial
Capped Call Transactions financial
make-whole fundamental change financial
Rule 144A regulatory
qualified institutional buyers regulatory
fundamental change repurchase price financial
FAQ
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What convertible notes did Penguin Solutions (PENG) issue in July 2026?
How will Penguin Solutions (PENG) use the net proceeds from its $750.0 million notes?
What are the conversion terms of Penguin Solutions (PENG) 2031 convertible notes?
How is Penguin Solutions (PENG) refinancing its 2029 and 2030 convertible notes?
What is the purpose of the capped call transactions for Penguin Solutions (PENG)?
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
Indenture and Convertible Senior Notes
On July 17, 2026, Penguin Solutions, Inc. (the “Company”) issued $750.0 million aggregate principal amount of the Company’s 0.00% Convertible Senior Notes due 2031 (the “Notes”) pursuant to an indenture, dated July 17, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee (the “Trustee”).
Pursuant to the purchase agreement between the Company and the initial purchasers (the “Initial Purchasers”) of the Notes, the Company granted the Initial Purchasers an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $100,000,000 principal amount of Notes. The Notes issued on July 17, 2026 include $100,000,000 principal amount of Notes issued pursuant to the full exercise by the Initial Purchasers of such option.
The Company estimates that the net proceeds from the offering of the Notes will be approximately $735.1 million, after deducting the Initial Purchasers’ discounts and commissions and estimated offering expenses payable by the Company. The Company is using (1) approximately $136.7 million of the net proceeds to repurchase $135.5 million aggregate principal amount of Penguin Solutions (Cayman), Inc.’s existing 2.00% convertible senior notes due 2029 (the “2029 Notes”), (2) approximately $161.4 million of the net proceeds to repurchase $160.0 million aggregate principal amount of Penguin Solutions (Cayman), Inc.’s existing 2.00% convertible senior notes due 2030 (the “2030 Notes,” and together with the 2029 Notes, the “Existing Notes”), (3) approximately $49.1 million of the net proceeds to pay the cost of the Capped Call Transactions (as defined below) and (4) net proceeds to repay the $100.0 million principal amount outstanding under the credit agreement, dated as of June 24, 2025, among Penguin Solutions (Cayman), Inc. and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.), each a wholly owned subsidiary of the Company, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank and the other parties thereto (the “Credit Agreement”), as well as interest. The Company intends to use the remainder of the net proceeds for general corporate purposes.
The Notes will not bear regular interest, and the principal amount of the Notes will not accrete. The Notes will mature on August 1, 2031, unless earlier converted, redeemed or repurchased. The Notes are convertible into cash and, if applicable, shares of the Company’s common stock, $0.03 par value per share (the “Common Stock”).
Holders may convert their Notes at their option in the following circumstances:
| • | during any fiscal quarter commencing after the fiscal quarter ending on August 28, 2026 (and only during such fiscal quarter), if the last reported sale price per share of Common Stock exceeds 130% of the conversion price for each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the last trading day of the immediately preceding fiscal quarter; |
| • | during the five consecutive business days immediately after any 10 consecutive trading day period (such 10 consecutive trading day period, the “Measurement Period”) in which the trading price per $1,000 principal amount of Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price per share of Common Stock on such trading day and the conversion rate on such trading day; |
| • | upon the occurrence of certain corporate events or distributions on the Common Stock, as provided in the Indenture; |
| • | if the Company calls such Notes for redemption; and |
| • | at any time from, and including, May 1, 2031 until the close of business on the second scheduled trading day immediately before the maturity date. |
The initial conversion rate of the Notes is 8.5690 shares of Common Stock per $1,000 principal amount of Notes, which represents an initial conversion price of approximately $116.70 per share of Common Stock. The conversion rate is subject to adjustment upon the occurrence of certain specified events as set forth in the Indenture. Upon conversion, the Company will pay or deliver, as applicable, cash and, if applicable, shares of Common Stock, based on the applicable conversion rate(s) as described in the Indenture.
Upon the occurrence of a “make-whole fundamental change” (as defined in the Indenture), the Company will in certain circumstances increase the conversion rate for a specified period of time.
In addition, upon the occurrence of a “fundamental change” (as defined in the Indenture), holders of the Notes may require the Company to repurchase their Notes at a cash repurchase price equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any.
The Company may redeem the Notes, in whole or in part, at its option at any time, and from time to time, on or after August 6, 2029 and on or before the 31st scheduled trading day immediately before the maturity date, at a cash redemption price equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special and additional interest, if any, but only if (1) the Notes are “freely tradable” (as defined in the Indenture), and all accrued and unpaid additional interest, if any, to, but excluding, the redemption date, has been paid in full as of the first interest payment date occurring on or before the date the Company sends such redemption notice; and (2) the last reported sale price per share of Common Stock exceeds 130% of the conversion price on (i) each of at least 20 trading days, whether or not consecutive, during the 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends such redemption notice; and (ii) the trading day immediately before the date the Company sends such redemption notice. In addition, calling any Note for redemption will constitute a make-whole fundamental change with respect to that Note, in which case the conversion rate applicable to the conversion of that Note will be increased in certain circumstances if it is converted after it is called for redemption. No sinking fund is provided for the Notes.
The Indenture includes customary terms and covenants, including certain events of default. The events of default, as set forth in the Indenture, include: (i) default by the Company in the payment when due (whether at maturity, upon redemption or repurchase upon fundamental change or otherwise) of the principal of, or the redemption price or fundamental change repurchase price for, any Note, (ii) default by the Company for 30 consecutive days in the payment when due of special interest or additional interest, if any, that has accrued on any Note, (iii) failure by the Company to deliver, when required by the Indenture, a fundamental change notice, if such failure is not cured within five business days after its occurrence, or a notice of certain corporate events as provided in the Indenture, (iv) default by the Company in its obligations to convert a Note in accordance with the Indenture upon the exercise of the conversion right with respect thereto, if such default is not cured within three business days after its occurrence, (v) default by the Company in its obligations under the Indenture in respect of certain consolidation, merger and asset sale transactions, (vi) default by the Company in its other obligations or agreements under the Indenture or the Notes if such default is not cured or waived within 60 days after notice is given in accordance with the Indenture, (vii) certain defaults by the Company or any of its significant subsidiaries, as defined in the Indenture, with respect to indebtedness for borrowed money of at least $50,000,000 (or its foreign currency equivalent) and (viii) certain events of bankruptcy, insolvency and reorganization involving the Company or any of its significant subsidiaries, as defined in the Indenture.
If an event of default involving bankruptcy, insolvency or reorganization events with respect to the Company occurs, then the principal amount of, and all accrued and unpaid interest, if any, on, all of the Notes then outstanding will immediately become due and payable without any further action or notice by any person. If any other event of default occurs and is continuing, either the Trustee, by notice to the Company, or the holders of at least 25% of the aggregate principal amount of the Notes then outstanding, by notice to the Company and the Trustee, may declare the principal amount of, and all accrued and unpaid interest, if any, on, all of the Notes then outstanding to become due and payable immediately.
The Notes are senior, unsecured obligations of the Company and are equal in right of payment with the Company’s existing and future senior, unsecured indebtedness, senior in right of
payment to the Company’s existing and future indebtedness that is expressly subordinated to the Notes and effectively subordinated to the Company’s existing and future senior, secured indebtedness, to the extent of the value of the collateral securing that indebtedness. The Notes are structurally subordinated to all existing and future indebtedness (including amounts due under the Credit Agreement and the Existing Notes) and other liabilities, including trade payables, and (to the extent the Company is not a holder thereof) preferred equity, if any, of the Company’s subsidiaries to the extent the Company does not guarantee such indebtedness.
A copy of the Indenture and form of Note are filed as Exhibits 4.1 and 4.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein. The foregoing descriptions of the Indenture and the Notes do not purport to be complete and are qualified in their entirety by reference to such exhibits.
Capped Call Transactions
On July 14, 2026, in connection with the pricing of the Notes, the Company entered into privately negotiated capped call transactions (collectively, the “Base Capped Call Transactions”) with certain financial institutions (collectively, the “Option Counterparties”). In addition, on July 15, 2026, in connection with the Initial Purchasers’ exercise of their option to purchase additional Notes, the Company entered into additional capped call transactions (the “Additional Capped Call Transactions,” and, together with the Base Capped Call Transactions, the “Capped Call Transactions”) with each of the Option Counterparties. The Capped Call Transactions cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of Common Stock that initially underlie the Notes, and are expected generally to reduce the potential dilution to holders of Common Stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, as the case may be, with such reduction and/or offset subject to a cap, based on the cap price of the Capped Call Transactions. The cap price of the Capped Call Transactions is initially $175.05 per share, which represents a premium of 125% over the last reported sale price of the Common Stock on July 14, 2026. The cost of the Capped Call Transactions was approximately $49.1 million.
The Capped Call Transactions are separate transactions, in each case entered into between the Company and the respective Option Counterparty and are not part of the terms of the Notes and will not affect any holder’s rights under the Notes. Holders of the Notes will not have any rights with respect to the Capped Call Transactions.
A copy of the form of confirmation for the Capped Call Transactions is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated by reference herein. The foregoing description of the terms of the Capped Call Transactions does not purport to be complete and is qualified in its entirety by reference to such exhibit.
Exchange Transactions
Concurrently with the pricing of the Notes, the Company, as guarantor, and Penguin Solutions (Cayman), Inc., as issuer of the Existing Notes, entered into separate, privately negotiated transactions (the “Exchange Transactions”) effected through one of the Initial Purchasers, as the Company’s agent, with a limited number of holders of the Existing Notes to exchange (i) approximately $135.5 million aggregate principal amount of the 2029 Notes for aggregate consideration consisting of approximately $136.7 million in cash, which includes accrued interest on such 2029 Notes, and approximately 4.7 million shares of Common Stock, and (ii) $160.0 million aggregate principal amount of the 2030 Notes for aggregate consideration consisting of approximately $161.4 million in cash, which includes accrued interest on such 2030 Notes, and approximately 4.0 million shares of Common Stock. The Exchange Transactions are expected to be consummated on or about July 17, 2026.
This Current Report on Form 8-K is neither an offer to sell nor a solicitation of an offer to buy any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offer, solicitation or sale would be unlawful.
| Item 2.03 | Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant. |
The disclosure set forth under the heading Indenture and Convertible Senior Notes in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 2.03.
| Item 3.02 | Unregistered Sales of Equity Securities. |
Convertible Senior Notes
The disclosure set forth under the heading Indenture and Convertible Senior Notes in Item 1.01 of this Current Report on Form 8-K is incorporated by reference into this Item 3.02.
The Notes were issued to the Initial Purchasers in reliance upon Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), in transactions not involving any public offering. The Notes were resold by the Initial Purchasers to persons whom the Initial Purchasers reasonably believe are “qualified institutional buyers,” as defined in, and in accordance with, Rule 144A under the Securities Act. Any Common Stock that may be issued upon conversion of the Notes will be issued in reliance upon Section 3(a)(9) of the Securities Act as involving an exchange by the Company exclusively with its security holders. Initially, a maximum of 9,640,050 shares of Common Stock may be issued upon conversion of the Notes, based on the initial maximum conversion rate of 12.8534 shares of Common Stock per $1,000 principal amount of Notes, which is subject to customary anti-dilution adjustment provisions.
The offer and sale of the Notes and any shares of Common Stock issuable upon conversion thereof have not been registered under the Securities Act or any applicable state securities laws, and the Notes and any such Common Stock may not be offered or sold in the United States except pursuant to an effective registration statement or an exemption from the registration requirements of the Securities Act and any applicable state securities laws.
Exchange Transactions
The disclosure set forth in Item 1.01 above under the heading Exchange Transactions is incorporated by reference into this Item 3.02. The issuance and sale of Common Stock pursuant to the Exchange Transactions were or will be made in transactions exempt from registration pursuant to Section 3(a)(9) and/or Section 4(a)(2) under the Securities Act.
| Item 8.01 | Other Events. |
On July 13, 2026, the Company issued a press release announcing the launch of the offering and sale of the Notes. On July 14, 2026, the Company issued a press release announcing the pricing of the Notes. Copies of the press releases are filed as Exhibits 99.1 and 99.2, respectively, to this Current Report on Form 8-K and are incorporated by reference herein.
Forward-Looking Statements
This Form 8-K contains forward-looking statements within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995. These statements include, but are not limited to, statements regarding the expected effect of the Capped Call Transactions, the expected use of net proceeds and the consummation of the Exchange Transactions.
These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” “could,” and other words of similar meaning. Forward-looking statements provide the Company’s current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of risks, uncertainties and other factors, many of which are outside of the Company’s control, including but not limited to, the risks listed or described from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K for the year ended August 29, 2025 as filed with the SEC on October 21, 2025. Such risks, uncertainties and factors as outlined above and in such filings do not constitute all risks, uncertainties and factors that could cause actual results of the Company to be materially different from such forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that the Company makes in this Current Report on Form 8-K speak only as of the date of this Current Report on Form 8-K. Except as required by law, the Company does not undertake to update the forward-looking statements contained in this Current Report on Form 8-K to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits.
| Exhibit Number |
Exhibit | |
| 4.1 | Indenture, dated as of July 17, 2026, between Penguin Solutions, Inc. and U.S. Bank Trust Company, National Association, as Trustee | |
| 4.2 | Form of certificate representing the 0.00% Convertible Senior Notes due 2031 (included as Exhibit A to the Indenture filed as Exhibit 4.1) | |
| 10.1 | Form of Confirmation for the Capped Call Transactions | |
| 99.1 | Press Release issued by Penguin Solutions, Inc. on July 13, 2026 | |
| 99.2 | Press Release issued by Penguin Solutions, Inc. on July 14, 2026 | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: July 17, 2026 | Penguin Solutions, Inc. | |||||
| By: | /s/ Aaron Johnson | |||||
| Aaron Johnson | ||||||
| Interim Chief Financial Officer | ||||||
| (Interim Principal Financial and Accounting Officer) | ||||||
Exhibit 99.1
Penguin Solutions Announces Proposed Private Offering of Convertible Notes and Refinancing to Enhance Capital Structure
FREMONT, Calif., July 13, 2026 (BUSINESS WIRE) — Penguin Solutions, Inc. (“Penguin,” “we” or the “Company”) (Nasdaq: PENG) 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, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $100.0 million aggregate principal amount of Notes.
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. 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).
The Notes will be redeemable, in whole or in part, for cash at Penguin’s option at any time, and from time to time, on or after August 6, 2029, and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of common stock of the Company exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.
If certain corporate events that constitute a “fundamental change” occur, then, subject to a limited exception, noteholders may require Penguin to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date.
Penguin expects to use the net proceeds from the offering to fund the cost of entering into the capped call transactions described below, pay the cash portion of the consideration for the Existing Notes (as defined below) being refinanced through concurrent exchange transactions described below, repay $100.0 million outstanding under the credit agreement, dated as of June 24, 2025, among Penguin Solutions (Cayman), Inc. and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.), each a wholly owned subsidiary of Penguin, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank and the other parties thereto (the “Credit Agreement”) and for general corporate purposes.
Concurrently with the offering, in separate, privately negotiated transactions, 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 Penguin Solutions (Cayman), Inc.’s (i) 2.00% convertible senior notes due 2029 (the “2029 Notes”) and (ii) 2.00% convertible senior notes due 2030 (the “2030 Notes,” and together with the 2029 Notes, the “Existing 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.
Holders of the Existing Notes that participate in any of these exchanges (including the concurrent exchanges described in the preceding paragraph), repurchases or induced conversions may purchase or sell shares of Penguin’s common stock in the open market and/or enter into or unwind various derivative transactions to unwind any hedge positions they may have with respect to the Existing Notes or to hedge their exposure in connection with these transactions. These activities could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of Penguin’s common stock and, if conducted concurrently with the pricing of the Notes, could affect the trading price of the Notes that Penguin is offering and could result in a higher effective conversion price of the Notes.
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.
The interest rate, initial conversion rate, offering price and other terms of the Notes have not been finalized and will be determined at the time of pricing of the offering.
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 “Option Counterparties”). The capped call transactions are expected to cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of the Company’s common stock that will initially underlie the Notes. If the initial purchasers exercise their option to purchase additional Notes, the Company expects to enter into additional capped call transactions with the Option Counterparties.
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, as the case may be, upon conversion of the Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.
In connection with establishing their initial hedge positions with respect to the capped call transactions, the Option Counterparties and/or their respective affiliates expect to purchase shares of the Company’s common stock and/or enter into various derivative transactions with respect to the Company’s common stock concurrently with, or shortly after, the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the Notes at that time.
In addition, the Option Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so (x) following any conversion of the Notes or any repurchase of the Notes by the Company on any fundamental change repurchase date or any redemption date, (y) following any other repurchase of the Notes if the Company elects to unwind a corresponding portion of the capped call transactions in connection with such repurchase and (z) if the Company otherwise elects to unwind all or a portion of the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the Notes, which could affect the ability of holders to convert their Notes, and, to the extent the activity occurs during any observation period related to a conversion of the Notes, it could affect the amount and value of the consideration that holders will receive upon conversion of their Notes. The Company does not intend, at this time, to terminate or amend the existing capped call transactions previously entered into with respect to the Existing Notes. However, the Company may, in the future, undertake to terminate or unwind all or a portion of the existing capped call transactions, whether in proportion to the amount of the respective Existing Notes repurchased by the Company in exchange, repurchase or induced conversion transactions or otherwise.
The offer and sale of the Notes and any shares of common stock issuable upon conversion of the Notes or issuable in the proposed exchange transactions described above, if any, 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 proposed 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, and Penguin reserves the right to elect not to proceed with the proposed exchange transactions.
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.
Headquartered in Silicon Valley, California, we operate globally through our network of R&D, manufacturing, and sales locations.
Use of Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that are not historical in nature, that are predictive or that depend upon or refer to future events or conditions. These statements may include, but are not limited to, statements regarding the completion of the offering of the Notes, the terms of the Notes being offered and the proposed exchange transactions, the expected amount and intended use of the net proceeds from the offering, including the exchange transactions for certain of the Existing Notes and repayment of certain amounts outstanding under the Credit Agreement, and the effects of entering into the capped call transactions and the actions of the Option Counterparties and their respective affiliates. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” “could,” and other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of risks, uncertainties and other factors, many of which are outside of our control, including, among others, failure to realize opportunities relating to the company’s growth and stakeholder value, whether the offering will be consummated, including the satisfaction of the closing conditions related to the offering, whether the capped call transactions will become effective, whether the exchange transactions will become effective and other factors and risks detailed in Penguin’s filings with the U.S. Securities and Exchange Commission, including Penguin’s most recent Annual Report on Form 10-K. Penguin may not consummate the proposed
offering or exchange transactions described in this press release and, if the proposed offering or exchange transactions are consummated, cannot provide any assurances regarding the final terms of the offer or the Notes or its ability to effectively apply the net proceeds as described above or the final terms of the exchange transactions. Such risks, uncertainties and factors as outlined above and in such filings do not constitute all factors and risks that could cause actual results of Penguin to be materially different from Penguin’s forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that we make in this press release speak only as of the date of this press release. Except as required by law, we do not undertake to update the forward-looking statements contained in this press release to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made.
Investor Contact:
Lori Barker
Investor Relations
ir@penguinsolutions.com
PR Contact:
Maureen O’Leary
Corporate Communications
+1-602-330-6846
pr@penguinsolutions.com
Exhibit 99.2
Penguin Solutions Announces Pricing of Private Offering of $650.0 Million of 0.00% Convertible Notes and Refinancing to Enhance Capital Structure
| • | Enhances capital structure and extends debt maturities through opportunistic refinancing of certain existing convertible notes |
| • | Reduces potential dilution upon conversion of notes through capped call transactions |
| • | Strengthens financial flexibility |
FREMONT, Calif., July 14, 2026 (BUSINESS WIRE) — Penguin Solutions, Inc., the AI Factory Platform Company (“Penguin,” “we” or the “Company”) (Nasdaq: PENG), today announced the pricing of $650.0 million in aggregate principal amount of convertible senior notes due 2031 (the “Notes”) to be offered and sold to qualified institutional buyers as defined in Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”). Concurrently with the offering, the Company expects to exchange a portion of certain existing convertible senior notes due 2029 and 2030. The Company has granted the initial purchasers of the Notes an option to purchase, for settlement within a period of 13 days from, and including, the date the Notes are first issued, up to an additional $100.0 million aggregate principal amount of Notes. The offering is expected to close on or about July 17, 2026, subject to customary closing conditions.
The Notes will be senior, unsecured obligations of the Company. The notes will not bear regular interest, and the principal amount of the notes will not accrete. 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. 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). The initial conversion rate of the Notes is 8.5690 shares of common stock per $1,000 principal amount of Notes (which is equivalent to an initial conversion price of approximately $116.70 per share and represents a conversion premium of approximately 50% above the closing price of the Company’s common stock on July 14, 2026, which was $77.80 per share). The conversion rate is subject to adjustment upon the occurrence of certain events.
The Notes will be redeemable, in whole or in part, for cash at Penguin’s option at any time, and from time to time, on or after August 6, 2029, and on or before the 31st scheduled trading day immediately before the maturity date, but only if the last reported sale price per share of common stock of the Company exceeds 130% of the conversion price for a specified period of time and certain other conditions are satisfied. The redemption price will be equal to the principal amount of the Notes to be redeemed, plus accrued and unpaid special and additional interest, if any, to, but excluding, the redemption date.
If certain corporate events that constitute a “fundamental change” (as defined in the indenture for the Notes) occur, then, subject to a limited exception, noteholders may require Penguin to repurchase their Notes for cash. The repurchase price will be equal to the principal amount of the Notes to be repurchased, plus accrued and unpaid special and additional interest, if any, to, but excluding, the applicable repurchase date.
Penguin estimates that the net proceeds from the offering will be approximately $636.9 million (or approximately $735.1 million if the initial purchasers fully exercise their option to purchase additional Notes), after deducting the initial purchasers’ discounts and commissions and estimated offering expenses.
Penguin expects to use approximately $42.6 million of the net proceeds to fund the cost of entering into the capped call transactions described below; approximately $298.1 million of the net proceeds to pay the cash portion of the consideration for the Existing Notes (as defined below) being refinanced through concurrent exchange transactions described below; and $100.0 million of the net proceeds to repay amounts outstanding under the credit agreement, dated as of June 24, 2025, among Penguin Solutions (Cayman), Inc. and Penguin Solutions Corporation (formerly known as SMART Modular Technologies, Inc.), each a wholly owned subsidiary of Penguin, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, collateral agent and issuing bank and the other parties thereto (the “Credit Agreement”). Penguin intends to use the remainder of the net proceeds for general corporate purposes.
Concurrently with the offering, in 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”), Penguin Solutions (Cayman), Inc., as issuer of the Existing Notes, and the Company, as guarantor of the Existing Notes, expect to exchange (i) approximately $135.5 million principal amount of the 2029 Notes for aggregate consideration consisting of approximately $136.7 million in cash, which includes accrued interest on such 2029 Notes, and approximately 4.7 million shares of the Company’s common stock, and (ii) $160.0 million principal amount of the 2030 Notes for aggregate consideration consisting of approximately $161.4 million in cash, which includes accrued interest on such 2030 Notes, and approximately 4.0 million shares of the Company’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.
Holders of the Existing Notes that participate in any of these exchanges (including the concurrent exchanges described in the preceding paragraph), repurchases or induced conversions may purchase or sell shares of Penguin’s common stock in the open market and/or enter into or unwind various derivative transactions to unwind any hedge positions they may have with respect to the Existing Notes or to hedge their exposure in connection with these transactions. These activities could increase (or reduce the size of any decrease in) or decrease (or reduce the size of any increase in) the market price of Penguin’s common stock and could affect the trading price of the Notes and may have resulted in a higher effective conversion price of the Notes.
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 has entered into privately negotiated capped call transactions with certain financial institutions (the “Option Counterparties”). The capped call transactions are expected to cover, subject to anti-dilution adjustments substantially similar to those applicable to the Notes, the number of shares of the Company’s common stock that will initially underlie the Notes. If the initial purchasers exercise their option to purchase additional Notes, the Company expects to enter into additional capped call transactions with the Option Counterparties.
The cap price of the capped call transactions will initially be $175.05 per share of the Company’s common stock, which represents a 125% premium over the closing price of the Company’s common stock on July 14, 2026, and is subject to certain adjustments under the terms of the capped call transactions.
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, as the case may be, upon conversion of the Notes. If, however, the market price per share of the Company’s common stock, as measured under the terms of the capped call transactions, exceeds the cap price of the capped call transactions, there would nevertheless be dilution and/or there would not be an offset of such cash payments, in each case, to the extent that such market price exceeds the cap price of the capped call transactions.
In connection with establishing their initial hedge positions with respect to the capped call transactions, the Option Counterparties and/or their respective affiliates expect to purchase shares of the Company’s common stock and/or enter into various derivative transactions with respect to the Company’s common stock concurrently with, or shortly after, the pricing of the Notes. This activity could increase (or reduce the size of any decrease in) the market price of the Company’s common stock or the Notes at that time.
In addition, the Option Counterparties and/or their respective affiliates may modify their hedge positions by entering into or unwinding various derivative transactions with respect to the Company’s common stock and/or purchasing or selling the Company’s common stock or other securities of the Company in secondary market transactions following the pricing of the Notes and prior to the maturity of the Notes (and are likely to do so (x) following any conversion of the Notes or any repurchase of the Notes by the Company on any fundamental change repurchase date or any redemption date, (y) following any other repurchase of the Notes if the Company elects to unwind a corresponding portion of the capped call transactions in connection with such repurchase and (z) if the Company otherwise elects to unwind all or a portion of the capped call transactions). This activity could also cause or avoid an increase or a decrease in the market price of the Company’s common stock or the Notes, which could affect the ability of holders to convert their Notes, and, to the extent the activity occurs during any observation period related to a conversion of the Notes, it could affect the amount and value of the consideration that holders will receive upon conversion of their Notes. The Company does not intend, at this time, to terminate or amend the existing capped call transactions previously entered into with respect to the Existing Notes. However, the Company may, in the future, undertake to terminate or unwind all or a portion of the existing capped call transactions, whether in proportion to the amount of the respective Existing Notes repurchased by the Company in exchange, repurchase or induced conversion transactions or otherwise.
The offer and sale of 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, and Penguin reserves the right to elect not to proceed with the exchange transactions.
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.
Headquartered in Silicon Valley, California, we operate globally through our network of R&D, manufacturing, and sales locations.
Use of Forward-Looking Statements
This press release contains “forward-looking statements” within the meaning of Section 27A of the Securities Act, Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995 that are not historical in nature, that are predictive or that depend upon or refer to future events or conditions. These statements may include, but are not limited to, statements regarding the completion of the offering of the Notes, the expected amount and intended use of the net proceeds from the offering, including the exchange transactions for certain of the Existing Notes and repayment of certain amounts outstanding under the Credit Agreement, the effects of entering into the capped call transactions and the actions of the Option Counterparties and their respective affiliates and plans and timing for terminating or amending the existing capped call transactions. These statements can be identified by the fact that they do not relate strictly to historical or current facts. Forward-looking statements often use words such as “anticipate,” “target,” “expect,” “estimate,” “intend,” “plan,” “goal,” “believe,” “could,” and other words of similar meaning. Forward-looking statements provide our current expectations or forecasts of future events, circumstances, results or aspirations and are subject to a number of risks, uncertainties and other factors, many of which are outside of our control, including, among others, failure to realize opportunities relating to the company’s growth and stakeholder value, whether the offering will be consummated, including the satisfaction of the closing conditions related to the offering, whether the capped call transactions will become effective, whether the exchange transactions will become effective and other factors and risks detailed in Penguin’s filings with the U.S. Securities and Exchange Commission, including Penguin’s most recent Annual Report on Form 10-K. Such risks, uncertainties and factors as outlined above and in such filings do not constitute all factors and risks that could cause actual results of Penguin to be materially different from Penguin’s forward-looking statements. Accordingly, investors are cautioned not to place undue reliance on any forward-looking statements. Any forward-looking statements that we make in this press release speak only as of the date of this press release. Except as required by law, we do not undertake to update the forward-looking statements contained in this press release to reflect the impact of circumstances or events that may arise after the date that the forward-looking statements were made.
Investor Contact:
Lori Barker
Investor Relations
ir@penguinsolutions.com
PR Contact:
Maureen O’Leary
Corporate Communications
+1-602-330-6846
pr@penguinsolutions.com