Company enters into agreement with its
debtholders to eliminate over 50% of its debt and infuse
approximately $110 million of new
capital into the business, enabling 2U to invest further in its
mission
All educational programs and services to
continue seamlessly with no interruption for partners or
learners
LANHAM,
Md., July 25, 2024 /PRNewswire/ -- 2U, Inc.
("2U" or the "Company"), a global leader in online education, today
announced that it has initiated a financial transaction to
strengthen its balance sheet and position the Company to advance
its mission of making high-quality education accessible to learners
around the world. The Company has entered into a Restructuring
Support Agreement, or RSA, with lenders and noteholders holding
approximately 87% of its outstanding debt that will provide
approximately $110 million of new
capital, reduce its debt by over 50% to approximately $459 million, and extend the maturity date of its
revolving and term loans to over two years following closing of the
transaction.
To implement the transaction, 2U and certain domestic
subsidiaries filed voluntary "prepackaged" Chapter 11 cases in the
U.S. Bankruptcy Court for the Southern District of New York. 2U expects to secure court approval
of financing totaling $64 million to
further support the Company's business operations throughout the
Chapter 11 process. The Company expects to complete the Chapter 11
process quickly, by the end of September, if not sooner.
"Today marks an important milestone for 2U. New capital and a
healthier balance sheet will enable us to continue our
long-standing mission," said Paul
Lalljie, Chief Executive Officer of 2U. "For over 15 years,
2U has led the online learning industry in the delivery of
innovative, high-impact education in partnership with an unmatched
network of leading universities. The steps we are taking today will
enable us to continue investing in our offerings, services, and
world-class team to deliver unparalleled online learning to meet
the needs of students today. As we move towards the successful
completion of this transaction, we are steadfastly focused on what
matters most: our partners and learners."
2U has filed a number of customary motions with the court to
ensure that its operations continue as usual while it implements
this transaction. All programs will proceed as planned with no
impact or disruption to learners as a result of this process, and
2U will continue providing all services for partners and students.
Additionally, the RSA contemplates that payments to vendors will
continue in the ordinary course.
Following court approval and the completion of the transaction,
2U expects to emerge from Chapter 11 as a private company backed by
its existing lenders and noteholders, including funds managed by
Mudrick Capital Management, LP, Greenvale Capital LLP, and Bayside
Capital, LLC.
"2U is a true pioneer in the delivery of education that changes
lives," said Brian Napack, Strategic
Advisor to the investment group. "This company's role in the
education ecosystem and its innovative approaches to increasing
education access are more important than ever, and this financing
demonstrates the investors' deep belief in 2U and commitment to its
essential mission." Mr. Napack is a longtime executive, director,
investor and advisor in the education industry, and is the former
CEO of John Wiley (WLY), Chairman of the Association of American
Publishers, and Senior Advisor at Providence Equity.
Additional information regarding 2U's Chapter 11 process is
available at https://dm.epiq11.com/2U. Stakeholders with questions
may call the Company's Claims Agent, Epiq, at 877-525-5725 or +1
360-803-4441 if calling from outside the U.S. or Canada, or email at 2UInc@epiqglobal.com.
Advisors
Latham & Watkins LLP is serving as legal
counsel, Moelis & Company is serving as investment banker,
AlixPartners LLP is serving as financial advisor, and C Street
Advisory Group is serving as strategic communications advisor to
the Company. Weil, Gotshal & Manges LLP is serving as legal
counsel to the ad hoc group of noteholders of the Company,
Schulte Roth & Zabel LLP is
serving as counsel to Greenvale Capital, LLP, and Houlihan Lokey is serving as investment banker
to the ad hoc group of noteholders and Greenvale. Milbank LLP is serving as legal
counsel and FTI Consulting, Inc. is serving as financial advisor to
the ad hoc group of first lien term loan lenders.
About 2U, Inc. (Nasdaq: TWOU)
2U is a global leader in
online education. Guided by its founding mission to eliminate the
back row in higher education, 2U has spent 15 years advancing the
technology and innovation to deliver world-class learning outcomes
at scale. Through its global online learning platform edX, 2U
connects more than 86 million people with thousands of affordable,
career-relevant learning opportunities in partnership with 260 of
the world's leading universities, institutions, and industry
experts. From free courses to full degrees, 2U is creating a better
future for all through the power of high-quality online education.
Learn more at 2U.com.
Cautionary Note Regarding Forward-Looking
Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements in this press release that are
not historical are forward-looking statements, including statements
regarding the timing and implementation of the restructuring
pursuant to the Restructuring Support Agreement (the "RSA"), the
chapter 11 cases (the "Chapter 11 Cases"), the prepackaged joint
plan of reorganization (the "Plan"), the Company's ability to
continue operating in the ordinary course while the Chapter 11
Cases are pending, and the potential benefits of the transactions
contemplated by the RSA and the Plan, including the timetable for
completing such transactions, if at all, and the effects of such
transactions on the Company's financial position and long-term
stability and growth. Forward-looking statements contain words such
as "expect," "anticipate," "could," "should," "intend," "plan,"
"believe," "seek," "see," "may," "will," "would," or "target."
Forward-looking statements are based on the Company's current
expectations, beliefs, assumptions, and estimates concerning the
future and are subject to significant business, economic, and
competitive risks, uncertainties, and contingencies. These risks,
uncertainties, and contingencies are difficult to predict, and
could cause the Company's actual results to differ materially from
those expressed or implied in such forward-looking statements.
These risks include, among others, those related to the effects
of the Chapter 11 Cases on the Company and the Company's
relationship with its various constituents, including colleges and
universities, faculty, students, regulatory authorities, including
the Department of Education, employees and other third parties; the
Company's ability to develop and implement the Plan and whether
that Plan will be approved by the bankruptcy court and the ultimate
outcome of the Chapter 11 Cases in general; the length of time the
Company will operate under the Chapter 11 Cases; the potential
adverse effects of the Chapter 11 Cases on the Company's liquidity
and results of operations, including failure to receive proceeds
under the debtor-in-possession financing facility (the "DIP
Facility"); the Company's ability to operate within the
restrictions and the liquidity limitations of the DIP Facility and
any other credit facility that the Company may enter into in
connection with the Chapter 11 Cases and restrictions imposed by
the applicable courts; the timing or amount of any recovery, if
any, to the Company's stakeholders; the potential cancellation of
the Company's common stock in the Chapter 11 Cases; the delisting
and deregistration of the Company's common stock and becoming a
private company; the potential material adverse effect of claims
that are not discharged in the Chapter 11 Cases; uncertainty
regarding the Company's ability to retain key personnel; increased
administrative and legal costs related to the Chapter 11 process;
changes in the Company's ability to meet its financial obligations
during the Chapter 11 process and to maintain contracts that are
critical to its operations; the effectiveness of the overall
restructuring activities pursuant to the Chapter 11 Cases and any
additional strategies that the Company may employ to address its
liquidity and capital resources, achieve its stated goals, and
continue as a going concern; the actions and decisions of
equityholders, creditors, regulators, and other third parties that
have an interest in the Chapter 11 Cases, which may interfere with
the ability to confirm and consummate the Plan; and those risks
described under the heading "Risk Factors" in 2U's Annual Report on
Form 10-K for the year ended December 31,
2023, 2U's Quarterly Report on Form 10-Q for the quarter
ended March 31, 2024, and 2U's other
filings with the U.S. Securities and Exchange Commission. We refer
you to such documents for a discussion of these and other risks and
uncertainties. Should one or more of these risks or uncertainties
materialize, or should the underlying assumptions prove incorrect,
actual results may vary materially and adversely from those
indicated or anticipated, whether express or implied, by such
forward-looking statements. These forward-looking statements speak
only as of the date they are made. The Company undertakes no duty
or obligation to update any forward-looking statement after the
date of this press release, whether as a result of new information,
future events, changes in assumptions, or otherwise.
Media Contact
C Street Advisory Group
2U@thecstreet.com
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SOURCE 2U, Inc.