(Bloomberg) -- 2U Inc., the publicly traded owner of the edX online education platform, has filed for bankruptcy with a creditor-backed deal that will take the business private.
Lanham, Maryland-based 2U filed for Chapter 11 in New York bankruptcy court, listing assets and liabilities of at least $1 billion each. 2U has about $945 million in long-term debt, according to court documents.
The company has entered into an agreement with creditors to cut its debt by more than 50%, reducing the amount to about $459 million, it said in a separate statement. As part of the deal, it will get about $110 million of fresh capital.
The agreement allows the firm to extend the maturity date of its revolving and term loans to over two years. The restructuring deal must be reviewed by a bankruptcy judge.
2U expects to emerge from bankruptcy 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, according to the statement. Existing 2U shares will be canceled for no consideration, which is common in Chapter 11, court papers say.
Quick Process
It also expects to secure court approval of financing totaling $64 million to further support its business operations. The company said it expects to complete the restructuring process by the end of September, if not sooner.
In the meantime, the company said its educational programs and services will continue as normal, and vendors will continue to be paid.
“New capital and a healthier balance sheet will enable us to continue our long-standing mission,” said Chief Executive Officer Paul Lalljie.
2U sought court protection after saying earlier this year that it didn’t expect to generate enough revenue to satisfy a covenant contained in its credit facilities. Company executives said during a May earnings call that they were having constructive talks with debt holders to address the covenant.
2U acquired edX in 2021 to bolster its online education offerings. The company offers online courses, boot camps and other classes through its platform and has partnered with Harvard University and other colleges.
(Adds details from court filings throughout. A previous version corrected Lalljie’s title.)
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