2u (TWOU) files voluntary "prepackaged" Chapter 11

2U, Inc. (NASDAQ: TWOU) 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 [email protected].

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.

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