2U, Inc. announced that it has entered into an agreement to refinance its term loan, extending the maturity date from December 2024 to December 2026, and amending other terms. In connection with amending and extending the term loan, the company has entered into agreements to secure approximately $127 million of new capital from Greenvale Capital LLP, a current stockholder of the company, and The Berg Family Trust, in the form of $147 million in principal amount of 4.50% Senior Unsecured Convertible Notes due 2030. The company intends to use cash from its balance sheet and the proceeds from the issuance of the Notes to reduce secured term loan debt by $187 million to $380 million. The combination of reduced secured debt and extended maturities will significantly strengthen the company's credit profile.

The closing of the Notes and the refinancing are subject to customary closing conditions. This refinancing represents a significant milestone for the company and is a testament to the strength of the business and its financial position. The company believes the improved financial profile will provide it with the flexibility and resources it needs to continue to thrive and succeed in the marketplace.

Amended and Extended Term Loan: The amended and extended term loan facility bears interest at a rate of the Term SOFR (with a floor of 0.75%) plus 6.5%. The loan has an original issue discount of 95 and an annual amortization of 1.0%. The amended credit agreement contains customary conditions to borrowing, events of default, and covenants—including covenants that restrict the company's ability to incur additional indebtedness, grant liens, make investments and acquisitions, pay dividends, repurchase equity interests in the company, and enter into affiliate transactions and asset sales.

Revolver:As part of the refinancing transaction, in addition to extending the maturity date, the lenders have agreed to provide the company with a senior secured first lien revolving loan facility in the principal amount of $40 million. 4.50% Senior Unsecured Convertible Notes due 2030: The conversion rate for the Notes will initially be 111.1111 shares of the company's common stock per $1,000 principal amount of Notes, which is equivalent to an initial conversion price of $9.00 per share of common stock. The initial conversion price of the Notes represents a conversion premium of approximately 40% to the closing price of the company's common stock on January 6, 2023.