Penguin Solutions Inc (PENG) shares took a hit in extended trading Monday after the company announced plans to raise $650 million through a convertible notes offering. The stock fell 11.55% to $68.28 in after-hours trading, according to market data.

The company said it will offer $650 million in convertible senior notes due 2031 to qualified institutional buyers in a private placement. Initial purchasers will also have a 13-day option to buy up to an additional $100 million in notes.

At the same time, Penguin plans to exchange a portion of its existing convertible notes due 2029 and 2030 through privately negotiated deals. The company intends to use the net proceeds to fund capped call transactions, cover the cash portion of the exchange consideration, and repay $100 million outstanding under its credit agreement dated June 24, 2025.

As of May 29, Penguin Solutions held about $440.3 million in total cash and cash equivalents. The stock had been trading near recent highs before the announcement, making the after-hours drop a notable reversal.