2U / edX Facing Additional Existential Changes
Phil Hill,
On Ed Tech,
Dec 05, 2023
Phil Hill makes 2U's dilemma clear: "he company has almost no chance of generating the cash through normal business operations to pay its debts, and its debt holders are in control now." The company doesn't have enough cash, and it can't raise enough funds, either through operations or selling shares, to meet nearly $1 billion of debt. There are reason why its offering was fundamentally unsound, and Phil Hill outlines them. But I would like to add one object lesson Hill omits: the company's acquisitions of Trilogy Bootcamp for $800 million and of EdX for $900 million. Acquisitions convert value to debt. They are rarely the best way to grow a company. They just create a need - an imperative, actually, to squeeze money from customers.
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