An Expanded Strategic Partnership
Li-Cycle Holdings Corp., a leading player in the lithium-ion battery resource recovery domain, is broadening its horizons with a freshly inked senior secured convertible note agreement. This $75 million investment boost from Glencore demonstrates a deepening commitment to Li-Cycle’s innovative Spoke & Hub recycling model and underscores both companies’ dedication to evolving battery materials circularity.
Strategic Vision and Liquidity Boost
Having already benefitted from Glencore’s investment earlier in June 2022, Li-Cycle views this additional financial infusion as a testament to the strength of their partnership. Ajay Kochhar, CEO of Li-Cycle, articulates this move as a strategic enhancement to the company’s liquidity, enabling them to progress efficiently in their comprehensive review process. With an additional commitment from the U.S. Department of Energy—a loan that could potentially amount to $375 million—Li-Cycle’s aspirations for the Rochester Hub have found strong backing.
Global Recycling Network and Technology Review
Tim Johnston, the company’s co-founder, shed light on Li-Cycle’s ongoing global recycling network assessment. He highlighted that reviewing the development strategy for the Rochester Hub, including an analysis of construction tactics and potential product mixes, is central to ensuring the company’s future market leadership in critical battery materials production. The utilization of Li-Cycle’s patented recycling technology is poised to meet the growing demand for battery materials sustainably.
Glencore’s Pledge to Circular Battery Materials
Kunal Sinha, Glencore’s Global Head of Recycling, commends the venture as a stepping stone towards realizing a scalable and sustainable battery recycling supply chain. Glencore and Li-Cycle aim to set the benchmark for battery circularity, satisfying a surge in customer demand for such services.
Li-Cycle’s Funding Strategy and Progress
With financial advisory and placement services provided by Moelis & Company LLC and a Special Committee’s diligent review, Li-Cycle’s navigation through strategic options has crystallized into this agreement with Glencore. The company is transparent about its intention to present a full-year financial statement for 2023 by mid-March 2024.
Highlights of the Glencore-Li-Cycle Investment Agreement
Building on Previous Commitments
The partnership between Glencore and Li-Cycle isn’t new. Glencore’s previous investment of $200 million and its commercial collaboration have laid the groundwork for an integrated opportunity to meet global demand for both primary and recycled battery materials.
Detailed Investment Terms with Glencore
The investment sees Glencore purchasing a $75 million senior secured convertible note from Li-Cycle, maturing in five years and convertible into Li-Cycle common shares. The financial intricacies of this investment involve various interest payment options, redemption rights, and security interests, aligning Li-Cycle’s growth with robust financial backing.
Amendment to Existing Agreements
An amended agreement for the existing convertible note involves two future tranches with specific triggers and adjusted terms, demonstrating strategic foresight and providing Li-Cycle with financial flexibility for its development projects.
Transfer Conditions and Restrictions
The agreement outlines provisions for the transfer of notes to safeguard against unauthorized ownership changes while maintaining compliance with the relevant securities laws. Additionally, the agreement stipulates lock-up periods and thresholds for potential beneficial ownership changes by Glencore, ensuring both parties’ interests are protected.
Exception Procured from New York Stock Exchange
In a crucial move to secure the note issuance without shareholder approval, Li-Cycle successfully obtained a financial viability exception from the NYSE. This green light from the exchange is vital as it enables Li-Cycle to address its liquidity needs expeditiously without a shareholder voting process, thereby safeguarding its financial viability.
Revised Shareholders’ Rights and Glencore’s Board Inclusion
An amended shareholder rights plan exempts Glencore from certain ownership thresholds, a strategic move to accommodate this transaction. Additionally, Li-Cycle will welcome new board nominees from Glencore, ensuring governance reflects the strategic partnership.
About Li-Cycle Holdings Corp.
Li-Cycle, listed as LICY on the NYSE, has established itself as a global leader in recycling lithium-ion batteries. Since 2016, their patent-protected technology has enabled the recovery of valuable materials from various types of lithium-ion batteries. Through their Spokes and future Hubs, they are committed to producing critical battery-grade materials like lithium carbonate, supporting a sustainable energy future.
Cautions Regarding Forward-Looking Statements
Li-Cycle has provided forward-looking statements that involve numerous risks and uncertainties. These statements are based on certain assumptions and reflect the company’s current expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which are not guaranteed and are subject to various risks, including Li-Cycle’s ongoing viability, development of the Rochester Hub, strategic transactions, funding needs, and market demand for battery materials.
