Shares of 2U, Inc. (NASDAQ: TWOU) exhibited a substantial recovery on the US markets today, soaring by 149.54% to reach $3.12 at the latest check. This comes after the stock closed at $1.25 in the most recent session, a drop of more than 30% during the previous week.
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Prudent Monetary Reorganization
The large increase in TWOU’s stock price might be ascribed to a crucial business determination declared towards the conclusion of the previous week. In order to strengthen its balance sheet and put the business in a better position, 2U said that it has started a financial restructuring.
A Restructuring Support Agreement (RSA) was signed by the business with noteholders and creditors totaling around 87% of its outstanding debt. By signing this agreement, the company will set aside about $110 million for fresh capital, reduce its debt by more than 50% to approximately $459 million, and extend the maturity dates of its term and revolving loans by more than two years after the transaction closes.
In order to carry out this reorganization, 2U voluntarily filed “prepackaged” Chapter 11 cases in the U.S. Bankruptcy Court for the Southern District of New York, together with a few domestic subsidiaries. TWOU expects the court to grant it permission to finance $64 million in order to sustain its operations during the Chapter 11 procedures. It’s anticipated that the procedure will be finished quickly—possibly by the end of September.
Continued Commitment to Education and Business Stability
With this reorganization, 2U has reached a significant turning point that will allow it to carry out its long-standing goal of providing high-impact online education in partnership with prestigious universities. To satisfy the changing demands of students, the firm intends to keep investing in its great personnel, goods, and services.
During the Chapter 11 process, 2U has filed several customary motions to ensure seamless operations, with all educational programs continuing as scheduled without any disruption to students or partners. Moreover, the RSA includes provisions for the continuation of payments to vendors in the ordinary course of business.
Upon obtaining court approval and completing the transaction, 2U expects to emerge from Chapter 11 as a private entity, supported by its current lenders and noteholders.
