Company: PENG
Filing Date: 2025-04-02
Form Type: 10-Q
Source: 0001628280-25-016182
Chunk: 119

Company: Penguin Solutions, Inc.
Filing Date: 2025-04-02
Form: 10-Q
Item: Part II, Item 8
Chunk 119
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1. Financial Statements – Notes to Consolidated Financial Statements – Divestiture of SMART Brazil.”

Preferred Share Investment

On December 13, 2024, we closed the SKT Investment (as defined below) by SK Telecom Co., Ltd. (“SKT”). Pursuant to the SKT Purchase Agreement, we sold to Astra AI Infra LLC, an affiliate of SKT, 200,000 convertible preferred shares, par value $0.03 per share, of Penguin Solutions (defined above as the “CPS”), at a price of $1,000 per share or an aggregate price of $200.0 million (the “SKT Investment”). The CPS are convertible into ordinary shares at an initial conversion price of $32.81, subject to adjustment upon the occurrence of certain events, will have an initial liquidation preference of 1x and will only be redeemable at our option, subject to certain conditions. The holder of the CPS may convert such holder’s CPS into ordinary shares at any time, provided that the CPS may, at our option, automatically be converted into ordinary shares on any date following the second anniversary of the closing upon certain conditions. The CPS entitles the holder to receive dividends of six percent per annum, cumulative, and payable quarterly in-kind or in cash at our option.

See “Item 1. Financial Statements – Notes to Consolidated Financial Statements – Preferred Share Investment.”

Cash Flows

Six Months EndedFebruary 28,2025March 1,2024Net cash provided by operating activities from continuing operations$86,696 $37,796 Net cash used for investing activities from continuing operations(23,271)(8,146)Net cash provided by (used for) financing activities from continuing operations175,096 (86,302)Net increase in cash and cash equivalents from discontinued operations— 90,097 Effect of changes in currency exchange rates— (1,180)Net increase in cash, cash equivalents and restricted cash$238,521 $32,265 

Operating Activities: Cash flows from operating activities reflects net income, adjusted for certain non-cash items, including depreciation and amortization expense, share-based compensation, gains and losses from investing or financing activities, and from the effects of changes in operating assets and liabilities.

Net cash provided by operating activities from continuing operations in the first six months of 2025 resulted primarily from net income of $14.8 million, adjusted for non-cash items of $58.8 million. Operating cash