Lanham, Maryland-based online education company 2U, once valued by Wall Street at more than $5 billion, saw its market value plunge below $12 million Thursday after the company filed for Chapter 11 bankruptcy reorganization.
2U, founded in 2008 as a pioneer in online college courses, had grown to be one of the largest companies offering online studies. It partners with more than 260 universities and institutions globally. But the bankruptcy filing comes under the weight of considerable debt and growing competition.
The company said its Chapter 11 reorganization will cut its debt in half, to about $459 million, and extend loan maturity dates by more than two years. It will emerge from Chapter 11 reorganization as a privately-held company backed by its current lenders and noteholders.
Its lenders have also agreed to invest another $110 million in the company as part of its reorganization.
The reorganization will not disrupt its programs or services, 2U said.
Much of 2U’s debt is tied to its $800 million acquisition of another online education company, edX, in 2021.
The company initiated a 30 to 1 reverse stock split in June after failing to meet the Nasdaq’s minimum listing requirements. Following its Chapter 11 announcement Thursday, 2U stock plunged more than 70%, to $1 per share.
