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Builds upon current long-term partnership and additional demonstrates Glencore’s endorsement of Li-Cycle’s Spoke & Hub mannequin, patented recycling know-how, and growth plans for the Rochester Hub, as a part of Glencore’s ambition to deliver extra circularity to the battery supplies house
Settlement amends current Glencore convertible word to offer for prolonged maturity, market-based re-pricing and granting of safety curiosity in two future tranches
Li-Cycle Holdings Corp. (NYSE: LICY) (“Li-Cycle” or the “Firm”), a number one world lithium-ion battery useful resource restoration firm, is happy to announce that it has entered into an settlement (the “Notice Buy Settlement”) to situation a senior secured convertible word in an mixture principal quantity of $75 million (the “Notice”) to an affiliate of Glencore plc (LON: GLEN) (“Glencore”), a number one producer, recycler, and marketer of nickel and cobalt for the manufacturing of lithium-ion batteries.
Ajay Kochhar, Li-Cycle co-founder and CEO, commented: “We’re happy to safe an extra $75 million funding from Glencore, following Glencore’s June 2022 funding, to enhance our liquidity place whereas we proceed our ongoing complete evaluate course of. This financing enhances Li-Cycle and Glencore’s current long-term, strategic partnership and represents an interim step in our funding technique to help Li-Cycle’s future plans. We additionally proceed to work intently with the U.S. Division of Power on the conditional dedication for a mortgage of as much as $375 million.”
Tim Johnston, Li-Cycle co-founder and Government Chairman, commented: “As a part of our beforehand introduced complete evaluate, Li-Cycle is constant to evaluate our world recycling community. We’re additionally reviewing our go-forward technique for the paused Rochester Hub, together with analyzing potential end-product combine choices and building technique. We consider the demand for vital battery supplies continues to speed up and Li-Cycle continues to work to place itself as a future chief within the manufacturing of vital battery supplies by way of our sustainable, protected, and patented recycling know-how.”
Kunal Sinha, International Head of Recycling for Glencore, and Non-Government Director of Li-Cycle’s Board of Administrators, commented: “Glencore is dedicated to bringing scalable and sustainable circularity into the provision chain of battery supplies. Our authentic funding in Li-Cycle, alongside key business agreements, shaped a part of this technique. At present, we’re happy to additional help Li-Cycle by way of this extra $75 million funding so each Li-Cycle and Glencore can proceed to construct the battery circularity platform of selection for our clients.”
Following the announcement by the Firm in October 2023 in respect of the Rochester Hub, the Firm shaped a Particular Committee (the “SC”) composed solely of unbiased and disinterested members of the Board (and which excluded Glencore’s Board consultant). The SC engaged Moelis & Firm LLC, a number one world funding financial institution (“Moelis”), as its monetary advisor and placement agent. The SC, with the help of Moelis, carried out a sturdy course of to evaluate and consider potential monetary and strategic options accessible to the Firm. After a cautious evaluate and evaluation of the options recognized by the SC by way of this course of, the Firm entered into the settlement with Glencore.
Li-Cycle administration expects to offer its full-year 2023 monetary and working outcomes on or earlier than March 15, 2024 as a part of the submitting of its Annual Report on Kind 10-Okay for the yr ended December 31, 2023.
Lengthy-Time period International Partnership
As beforehand introduced, Glencore has designated Li-Cycle as one in all its most popular recycling companions, and Li-Cycle and Glencore entered right into a strategic business partnership aimed to create an built-in platform to provide a worldwide buyer base with each main and recycled vital battery supplies. As a part of the partnership, Glencore beforehand made a $200 million funding in Li-Cycle in June 2022 by way of the acquisition of a convertible word (the “Present Notice”).
Glencore is a battery feedstock associate for Li-Cycle’s Spoke amenities, in addition to a future provider of each black mass and key reagents for Li-Cycle’s future Hub amenities. Glencore enhances the Firm’s current companions by way of off-take and advertising and marketing of Li-Cycle’s finish merchandise and sure by-products produced and anticipated to be produced at sure of the Firm’s Spokes and Hubs.
Glencore Monetary Funding Phrases
The Glencore funding will lead to Glencore buying from the Firm a senior secured convertible word within the mixture principal quantity of $75 million. The Notice will mature on the fifth anniversary of closing and will probably be convertible into frequent shares of the Firm at an preliminary conversion worth of $0.53 per Li-Cycle frequent share. Li-Cycle will probably be entitled, at its election, to pay curiosity on the Notice in money or in-kind (“PIK”). Money curiosity funds will probably be based mostly on the Secured In a single day Financing Fee (“SOFR”) plus 5.0% per yr, and PIK funds will probably be based mostly on SOFR plus 6.0% per yr.
The Notice is redeemable on the choice of Li-Cycle at a redemption worth equal to 100% of the then excellent principal quantity of the Notice being redeemed plus accrued and unpaid curiosity. Commencing with the supply of economic statements for the fiscal yr ending December 31, 2026, the Firm will probably be required to redeem a portion of the excellent principal quantity of the Notice in an quantity (the “ECF Quantity”) equal to a specified share of the surplus money move generated by Li-Cycle and its subsidiaries for the relevant fiscal yr (much less sure deductions and topic to professional rata software to sure different debt of Li-Cycle). On every redemption date, whether or not on account of an elective or necessary redemption, the Firm will probably be required to situation to Glencore plenty of warrants entitling Glencore to accumulate plenty of frequent shares of Li-Cycle equal to the principal quantity of the Notice being redeemed on such date divided by the then relevant conversion worth, having an train worth per share equal to the then relevant conversion worth of the Notice so redeemed and expiring on the sixth anniversary of the preliminary deadline (the “Redemption Warrants”). As safety for the Firm’s obligations underneath the Notice, Li-Cycle has agreed to provide Glencore a safety curiosity in considerably all of its property. As well as, sure of Li-Cycle’s subsidiaries organized in Canada, america, Switzerland and Germany have agreed to ensure the Firm’s obligations underneath the Notice and supply safety pursuits on considerably all of their property (within the case of the U.S. and Canadian subsidiaries) and sure specified property (within the case of the German and Swiss subsidiaries). The Notice may even be topic to sure reporting and affirmative and unfavorable operational covenants, together with, however not restricted to, limitations on the incurrence of indebtedness, the granting of liens, the disposition of property and the making of investments, dividends, distributions and funds of junior debt. Li-Cycle has additionally granted sure customary registration rights to Glencore in relation to the Notice.
As well as, Li-Cycle and Glencore have agreed to amend and restate the phrases of the Present Notice, in two tranches, every of which is able to embody new phrases that come into impact upon the prevalence of sure future occasions (the Present Notice, together with excellent PIK notes, as so amended and restated in two tranches, the “A&R Notes”). The primary A&R Notice will embody modifications to the phrases of the Present Notice that take impact on the date (the “First Modification Date”) that’s the earliest to happen of (a) the date that’s one month after the effectiveness and preliminary funding, if any, of a mission mortgage financing for the Rochester Hub, and (b) December 31, 2024. The second A&R Notice will embody modifications to the phrases of the Present Notice that take impact on the date (the “Second Modification Date”) that’s the earliest to happen of (a) the primary business manufacturing from the Rochester Hub, (b) building prices exceeding the development price range set forth within the mission mortgage financing, and (c) June 1, 2026. At every Modification Date the next phrases of every A&R Notice, which mirror the Notice, will take impact: the maturity will probably be amended to be 5 (5) years from the relevant Modification Date, the rate of interest will probably be amended to match the rate of interest relevant to the Notice, necessary redemption will probably be required (together with, from the First Modification Date and the Second Modification Date, the ECF Quantity in a professional rata quantity throughout the A&R Notes (to the extent modified) and the Notice), and the Firm will present ensures and safety for the A&R Notes according to the Notice. As well as, at every Modification Date the conversion worth for the relevant tranche will probably be adjusted to be the lesser of (x) an quantity decided on the premise of a 30-Day VWAP (quantity weighted common buying and selling worth) having a reference date equal to the relevant Modification Date plus a 25% premium, and (y) $9.95 per share (the present conversion worth of the Present Notice).
Glencore is permitted to switch the Notice, the Redemption Warrants and any frequent shares issued upon conversion of the Notice or train of any of the Redemption Warrants topic to sure switch restrictions together with compliance with U.S. and Canadian securities legal guidelines, and a prohibition on personal transfers to activist traders, international entities of concern or, with out the Firm’s consent, any materials competitor. Any transferees will probably be required to execute a joinder to the Notice Buy Settlement entered in reference to this transaction and any transferee that will beneficially personal at the very least 5% of the frequent shares (on an as-converted foundation) following the switch will probably be topic to a standstill settlement. The frequent shares issued upon conversion of the Notice or train of any of the Redemption Warrants are additionally topic to a 12-month lock-up from the deadline.
Glencore has additionally dedicated to not purchase helpful possession of further frequent shares of the Firm in extra of 5.0% of the then excellent voting securities of the Firm (topic to sure de minimis exceptions) or to hunt to take the Firm personal, with out the approval of a committee of disinterested administrators of the Firm and, within the case of a take-private transaction, the approval of a majority of the disinterested shareholders of the Firm. The Firm has agreed to seat two further nominees of Glencore on its Board of Administrators for a complete of three nominees, with the primary further nominee to be recognized by Glencore and (topic to customary approvals by the Firm) proposed for election on the Firm’s annual common assembly of shareholders to be held in 2024 and the second further nominee to be proposed (topic to customary approvals by the Firm) for election on the Firm’s annual common assembly of shareholders to be held in 2025 or, if earlier, upon the prevalence of a emptiness on the Firm’s Board of Administrators, topic to the Firm and Glencore mutually agreeing on such second nominee. Each further Glencore Board nominees are to not be associated events of Glencore and its associates and are to be unbiased underneath relevant Ontario securities legal guidelines, in addition to SEC and NYSE guidelines. Glencore has dedicated to not trigger the Firm to avail itself of the managed firm exemption underneath NYSE guidelines.
The issuance and sale of the Notice to Glencore is topic to customary closing circumstances and the expiration of the ten-day interval for required discover to shareholders informing them of the Firm’s reliance on the New York Inventory Change (“NYSE”) monetary viability exception to the NYSE’s shareholder approval coverage mentioned under, and is anticipated to shut on or about March 25, 2024. Further info concerning this announcement could also be present in a Kind 8-Okay that will probably be filed with the U.S. Securities and Change Fee and in a fabric change report that will probably be filed with the Ontario Securities Fee. Such materials change report is anticipated to be filed lower than 21 days earlier than the anticipated date of closing of the transaction as a result of anticipated shorter time period between the signing of the settlement with Glencore and the anticipated closing of the funding, with a purpose to allow the Firm to handle its near-term liquidity necessities on a extra well timed foundation.
As well as, Li-Cycle entered into an modification, efficient as of March 11, 2024 (“Modification No. 1”), to its restricted period shareholder rights plan entered into on October 31, 2023 (the “Rights Settlement”), to amend the definition of “Buying Particular person” to exempt Glencore Canada Company (“Glencore Canada”) or its associates and associates (such individuals collectively “Glencore Canada and GC Associates”) from the definition of Buying Particular person and to allow Glencore Canada and GC Associates’ helpful possession in sure circumstances that will in any other case be in extra of the 20% set off threshold calculated within the method set forth within the Rights Settlement.
Modification No. 1 gives that Glencore Canada and GC Associates is not going to be deemed an “Buying Particular person”, both individually or collectively, solely by advantage of, or on account of, (a) Glencore Canada and GC Associates’ helpful possession of the frequent shares of Li-Cycle issuable upon conversion of the Present Notice, as could also be amended and restated occasionally, together with such frequent shares of Li-Cycle issuable pursuant to the Firm’s proper to elect to pay interest-in-kind pursuant to the phrases of the Present Notice or the issuance to Glencore Canada and GC Associates and the train of any warrants upon redemption of the Present Notice in accordance with its phrases; (b) the legitimate and binding approval, execution, and supply of the Notice Buy Settlement and the issuance of the Notice; (c) the issuance to Glencore Canada and GC Associates of the frequent shares of Li-Cycle upon conversion of the Notice, in entire or half, together with any frequent shares of Li-Cycle issued in reference to any curiosity the Firm elects to pay in-kind; (d) the issuance to Glencore Canada and GC Associates and the following train of Redemption Warrants; and (e) the efficiency or consummation of any of the opposite transactions contemplated by the Notice Buy Settlement, the word buy settlement for the Present Notice, the Present Notice or the Notice (the foregoing actions, the “Permitted Occasions”); supplied nevertheless, that however the foregoing, Glencore Canada and GC Associates shall be deemed an Buying Particular person if Glencore Canada and GC Associates develop into the helpful proprietor of such variety of further frequent shares of Li-Cycle representing in extra of 5.0% of the Firm’s frequent shares excellent as of the date of the Notice Buy Settlement, aside from topic to sure de minimis exceptions.
The definition of “Buying Particular person” is additional amended to offer an exemption for any transferee of Glencore Canada and GC Associates, and any transferee of any such transferee, that, in any such case, has acquired helpful possession of frequent shares of Li-Cycle in accordance with the switch restrictions set forth within the word buy settlement for the Present Notice or the Notice Buy Settlement, as relevant, together with helpful possession acquired on account of the prevalence of a number of Permitted Occasions following such switch and sure different de minimis exceptions, with out triggering the exercisability of the rights.
In reference to the entry into the Glencore funding, the Firm has obtained the consent of Wooden River Capital, LLC (“Koch”), to the Glencore funding in respect of the present Convertible Notice, dated as of September 29, 2021, issued to Koch (the “Koch Notice”), in alternate for the Firm agreeing to amend the Koch Notice, as of the closing of the Glencore funding, to incorporate penalty curiosity upon an occasion of default according to the penalty curiosity provision of the Notice and to take away the ground and ceiling from the definition of SOFR within the Koch Notice.
New York Inventory Change Exception from Shareholder Approval
Though the issuance of the Notice would usually require approval of Li-Cycle’s shareholders underneath the shareholder approval coverage of the NYSE previous to the issuance of the frequent shares contemplated by the Notice, the Firm requested and acquired affirmation from the NYSE on March 1, 2024 that the NYSE is not going to object to the Firm’s reliance on the monetary viability exception to the NYSE’s shareholder approval coverage pursuant to NYSE Listed Firm Guide Paragraph 312.05.
Previous to entry into the settlement with Glencore, the audit committee of the Board of Administrators of Li-Cycle (the “Audit Committee”), composed solely of unbiased and disinterested members of the Board, decided that the delay related to acquiring a shareholder vote previous to consummation of the issuance of the Notice would critically jeopardize the monetary viability of Li-Cycle, and, on that foundation, the Audit Committee expressly authorized Li-Cycle’s reliance on the monetary viability exception to the requirement to hunt shareholder approval.
In accordance with NYSE necessities, the Firm will mail a letter to shareholders, not later than ten days previous to the anticipated closing of the issuance of the Notice, notifying them of its settlement with Glencore to, amongst different issues, situation the Notice and amend and restate the Present Notice and its intention to situation frequent shares upon conversion of the Notice, the A&R Notes and, if relevant, the Redemption Warrants, with out acquiring approval from its shareholders (the “Shareholder Letter”).
Multilateral Instrument 61-101 — Safety of Minority Safety Holders in Particular Transactions
The foregoing proposed transactions (the “Transactions”) between the Firm and Glencore are thought of “associated get together transactions” inside the which means of Multilateral Instrument 61-101 — Safety of Minority Safety Holders in Particular Transactions (“MI 61-101”) of the Canadian Securities Directors. In its consideration and approval of the Transactions, the unbiased members of the Board of Administrators of Li-Cycle decided that the Transactions will probably be exempt from the formal valuation and minority approval necessities of MI 61-101 on the premise of the “monetary hardship” exemptions in Sections 5.5(g) and 5.7(e) of MI 61-101. The Firm meets the necessities set out in Sections 5.5(g) and 5.7(e) of MI 61-101 based mostly on the unbiased members of the Board of Administrators of Li-Cycle, appearing in good religion, having unanimously decided that Li-Cycle is in critical monetary issue, that the Transactions are designed to enhance Li-Cycle’s monetary place, and that the phrases of the Transactions are affordable within the circumstances of Li-Cycle.
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is a number one world lithium-ion battery useful resource restoration firm. Established in 2016, and with main clients and companions world wide, Li-Cycle’s mission is to recuperate vital battery-grade supplies to create a home closed-loop battery provide chain for a clear power future. The Firm leverages its modern, sustainable and patent-protected Spoke & Hub Applied sciences™ to recycle all various kinds of lithium-ion batteries. At our Spokes, or pre-processing amenities, we recycle battery manufacturing scrap and end-of-life batteries to provide black mass, a powder-like substance which incorporates plenty of helpful metals, together with lithium, nickel and cobalt. At our future Hubs, or post-processing amenities, we plan to course of black mass to provide vital battery-grade supplies, together with lithium carbonate, for the lithium-ion battery provide chain. For extra info, go to https://li-cycle.com/.
Ahead-Wanting Statements
Sure statements contained on this press launch could also be thought of “forward-looking statements” inside the which means of the U.S. Personal Securities Litigation Reform Act of 1995, Part 27A of the U.S. Securities Act of 1933, as amended, Part 21 of the U.S. Securities Change Act of 1934, as amended, and relevant Canadian securities legal guidelines. Ahead-looking statements might usually be recognized by way of phrases akin to “will”, “proceed”, “intend”, “ponder”, “count on”, “potential”, “consider”, “future”, or different related expressions that predict or point out future occasions or traits or that aren’t statements of historic issues, though not all forward-looking statements include such figuring out phrases. Ahead-looking statements on this press launch embody, for instance, statements concerning Li-Cycle’s monetary and liquidity place; statements concerning the expectations concerning the as much as $375 million conditional dedication for a mortgage by the U.S. Division of Power; statements concerning the event of Li-Cycle’s Hub amenities, together with the Rochester Hub; statements concerning the expansion of world demand for vital battery supplies and Li-Cycle’s place as a number one supplier of vital battery supplies; statements concerning Glencore’s off-take and advertising and marketing of Li-Cycle’s finish merchandise and by-products anticipated to be produced at sure of the Firm’s Spokes and Hubs; statements concerning Li-Cycle’s capability to shut the Notice and the transactions contemplated thereby; and statements concerning the Firm’s intent to mail the Shareholder Letter and Li-Cycle’s monetary viability. These statements are based mostly on varied assumptions, whether or not or not recognized on this communication, which Li-Cycle consider are affordable within the circumstances. There could be no assurance that such estimates or assumptions will show to be appropriate and, consequently, precise outcomes or occasions might differ materially from expectations expressed in or implied by the forward-looking statements.
Ahead-looking statements contain inherent dangers and uncertainties, most of that are tough to foretell and plenty of of that are past the management of Li-Cycle, and are usually not ensures of future efficiency. Li-Cycle believes that these dangers and uncertainties embody, however are usually not restricted to, the next: Li-Cycle’s capability to proceed as a going concern for the twelve-month interval after the date of submitting of its 2023 annual report on Kind 10-Okay; Li-Cycle’s incapability to develop the Rochester Hub, and the danger that these capital initiatives is not going to meet expectations with respect to their productiveness or the specs of their finish merchandise; Li-Cycle’s engagement in strategic transactions, together with acquisitions, that would disrupt its enterprise, trigger dilution to its shareholders, cut back its monetary sources, lead to incurrence of debt, or show not to achieve success; further funds required to satisfy Li-Cycle’s capital necessities sooner or later not being accessible to Li-Cycle on commercially affordable phrases or in any respect when it wants them. These and different dangers and uncertainties associated to Li-Cycle’s enterprise are described in higher element within the part entitled “Threat Components” in its Annual Report on Kind 20-F filed with the U.S. Securities and Change Fee and the Ontario Securities Fee in Canada on January 31, 2022 and will probably be set forth underneath the Firm’s Annual Report on Kind 10-Okay and Quarterly Experiences on Kind 10-Q sooner or later. Due to these dangers, uncertainties and assumptions, readers shouldn’t place undue reliance on these forward-looking statements. Precise outcomes may differ materially from these contained in any forward-looking assertion. Li-Cycle undertakes no obligation to publicly replace any forward-looking assertion, whether or not on account of new info, future developments or in any other case.
Contacts
Investor Relations
Nahla A. Azmy
Sheldon D’souza
traders@li-cycle.com
Media
Louie Diaz
media@li-cycle.com
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