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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 improvement plans for the Rochester Hub, as a part of Glencore’s ambition to convey extra circularity to the battery supplies area
Settlement amends current Glencore convertible notice to supply 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 “Observe Buy Settlement”) to problem a senior secured convertible notice in an combination principal quantity of $75 million (the “Observe”) 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 a further $75 million funding from Glencore, following Glencore’s June 2022 funding, to enhance our liquidity place whereas we proceed our ongoing complete overview 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 carefully with the U.S. Division of Vitality 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 overview, Li-Cycle is continuous to overview 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 imagine the demand for essential battery supplies continues to speed up and Li-Cycle continues to work to place itself as a future chief within the manufacturing of essential battery supplies by means of our sustainable, secure, and patented recycling know-how.”
Kunal Sinha, World 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, fashioned a part of this technique. As we speak, we’re happy to additional help Li-Cycle by means of this extra $75 million funding so each Li-Cycle and Glencore can proceed to construct the battery circularity platform of alternative for our clients.”
Following the announcement by the Firm in October 2023 in respect of the Rochester Hub, the Firm fashioned 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, performed a strong course of to overview and consider potential monetary and strategic options obtainable to the Firm. After a cautious overview and evaluation of the options recognized by the SC by means of this course of, the Firm entered into the settlement with Glencore.
Li-Cycle administration expects to supply 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-Ok for the 12 months ended December 31, 2023.
Lengthy-Time period World Partnership
As beforehand introduced, Glencore has designated Li-Cycle as one in all its most well-liked recycling companions, and Li-Cycle and Glencore entered right into a strategic business partnership aimed to create an built-in platform to produce a worldwide buyer base with each major and recycled essential battery supplies. As a part of the partnership, Glencore beforehand made a $200 million funding in Li-Cycle in June 2022 by means of the acquisition of a convertible notice (the “Present Observe”).
Glencore is a battery feedstock accomplice for Li-Cycle’s Spoke services, in addition to a future provider of each black mass and key reagents for Li-Cycle’s future Hub services. Glencore enhances the Firm’s current companions by means of off-take and advertising 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 notice within the combination principal quantity of $75 million. The Observe will mature on the fifth anniversary of closing and will likely be convertible into frequent shares of the Firm at an preliminary conversion value of $0.53 per Li-Cycle frequent share. Li-Cycle will likely be entitled, at its election, to pay curiosity on the Observe in money or in-kind (“PIK”). Money curiosity funds will likely be primarily based on the Secured In a single day Financing Fee (“SOFR”) plus 5.0% per 12 months, and PIK funds will likely be primarily based on SOFR plus 6.0% per 12 months.
The Observe is redeemable on the choice of Li-Cycle at a redemption value equal to 100% of the then excellent principal quantity of the Observe being redeemed plus accrued and unpaid curiosity. Commencing with the supply of economic statements for the fiscal 12 months ending December 31, 2026, the Firm will likely be required to redeem a portion of the excellent principal quantity of the Observe in an quantity (the “ECF Quantity”) equal to a specified share of the surplus money stream generated by Li-Cycle and its subsidiaries for the relevant fiscal 12 months (much less sure deductions and topic to professional rata utility to sure different debt of Li-Cycle). On every redemption date, whether or not attributable to an non-obligatory or necessary redemption, the Firm will likely be required to problem to Glencore numerous warrants entitling Glencore to accumulate numerous frequent shares of Li-Cycle equal to the principal quantity of the Observe being redeemed on such date divided by the then relevant conversion value, having an train value per share equal to the then relevant conversion value of the Observe so redeemed and expiring on the sixth anniversary of the preliminary deadline (the “Redemption Warrants”). As safety for the Firm’s obligations below the Observe, Li-Cycle has agreed to offer Glencore a safety curiosity in considerably all of its belongings. As well as, sure of Li-Cycle’s subsidiaries organized in Canada, the US, Switzerland and Germany have agreed to ensure the Firm’s obligations below the Observe and supply safety pursuits on considerably all of their belongings (within the case of the U.S. and Canadian subsidiaries) and sure specified belongings (within the case of the German and Swiss subsidiaries). The Observe will 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 belongings 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 Observe.
As well as, Li-Cycle and Glencore have agreed to amend and restate the phrases of the Present Observe, in two tranches, every of which can embody new phrases that come into impact upon the incidence of sure future occasions (the Present Observe, together with excellent PIK notes, as so amended and restated in two tranches, the “A&R Notes”). The primary A&R Observe will embody modifications to the phrases of the Present Observe 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 venture mortgage financing for the Rochester Hub, and (b) December 31, 2024. The second A&R Observe will embody modifications to the phrases of the Present Observe 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 funds set forth within the venture mortgage financing, and (c) June 1, 2026. At every Modification Date the next phrases of every A&R Observe, which mirror the Observe, will take impact: the maturity will likely be amended to be 5 (5) years from the relevant Modification Date, the rate of interest will likely be amended to match the rate of interest relevant to the Observe, necessary redemption will likely 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 Observe), and the Firm will present ensures and safety for the A&R Notes according to the Observe. As well as, at every Modification Date the conversion value for the relevant tranche will likely 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 value) having a reference date equal to the relevant Modification Date plus a 25% premium, and (y) $9.95 per share (the present conversion value of the Present Observe).
Glencore is permitted to switch the Observe, the Redemption Warrants and any frequent shares issued upon conversion of the Observe 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 non-public transfers to activist traders, overseas entities of concern or, with out the Firm’s consent, any materials competitor. Any transferees will likely be required to execute a joinder to the Observe Buy Settlement entered in reference to this transaction and any transferee that will beneficially personal no less than 5% of the frequent shares (on an as-converted foundation) following the switch will likely be topic to a standstill settlement. The frequent shares issued upon conversion of the Observe 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 useful possession of extra 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 non-public, 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 extra nominees of Glencore on its Board of Administrators for a complete of three nominees, with the primary extra nominee to be recognized by Glencore and (topic to customary approvals by the Firm) proposed for election on the Firm’s annual basic assembly of shareholders to be held in 2024 and the second extra nominee to be proposed (topic to customary approvals by the Firm) for election on the Firm’s annual basic assembly of shareholders to be held in 2025 or, if earlier, upon the incidence of a emptiness on the Firm’s Board of Administrators, topic to the Firm and Glencore mutually agreeing on such second nominee. Each extra Glencore Board nominees are to not be associated events of Glencore and its associates and are to be unbiased below 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 below NYSE guidelines.
The issuance and sale of the Observe to Glencore is topic to customary closing situations 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 Trade (“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 data concerning this announcement could also be present in a Kind 8-Ok that will likely be filed with the U.S. Securities and Trade Fee and in a cloth change report that will likely 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 frame 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’ useful 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 supplies 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’ useful possession of the frequent shares of Li-Cycle issuable upon conversion of the Present Observe, as could also be amended and restated every so often, 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 Observe or the issuance to Glencore Canada and GC Associates and the train of any warrants upon redemption of the Present Observe in accordance with its phrases; (b) the legitimate and binding approval, execution, and supply of the Observe Buy Settlement and the issuance of the Observe; (c) the issuance to Glencore Canada and GC Associates of the frequent shares of Li-Cycle upon conversion of the Observe, in complete 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 Observe Buy Settlement, the notice buy settlement for the Present Observe, the Present Observe or the Observe (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 turn out to be the useful proprietor of such variety of extra frequent shares of Li-Cycle representing in extra of 5.0% of the Firm’s frequent shares excellent as of the date of the Observe Buy Settlement, aside from topic to sure de minimis exceptions.
The definition of “Buying Particular person” is additional amended to supply 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 useful possession of frequent shares of Li-Cycle in accordance with the switch restrictions set forth within the notice buy settlement for the Present Observe or the Observe Buy Settlement, as relevant, together with useful possession acquired on account of the incidence 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 prevailing Convertible Observe, dated as of September 29, 2021, issued to Koch (the “Koch Observe”), in alternate for the Firm agreeing to amend the Koch Observe, 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 Observe and to take away the ground and ceiling from the definition of SOFR within the Koch Observe.
New York Inventory Trade Exception from Shareholder Approval
Though the issuance of the Observe would typically require approval of Li-Cycle’s shareholders below the shareholder approval coverage of the NYSE previous to the issuance of the frequent shares contemplated by the Observe, the Firm requested and obtained 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 Observe would critically jeopardize the monetary viability of Li-Cycle, and, on that foundation, the Audit Committee expressly authorised 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 Observe, notifying them of its settlement with Glencore to, amongst different issues, problem the Observe and amend and restate the Present Observe and its intention to problem frequent shares upon conversion of the Observe, 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-about “associated celebration transactions” throughout 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 likely 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 primarily based 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 cheap 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 get better essential 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 services, we recycle battery manufacturing scrap and end-of-life batteries to provide black mass, a powder-like substance which accommodates numerous beneficial metals, together with lithium, nickel and cobalt. At our future Hubs, or post-processing services, we plan to course of black mass to provide essential battery-grade supplies, together with lithium carbonate, for the lithium-ion battery provide chain. For extra data, go to
Ahead-Trying Statements
Sure statements contained on this press launch could also be thought-about “forward-looking statements” throughout the which means of the U.S. Non-public 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 Trade Act of 1934, as amended, and relevant Canadian securities legal guidelines. Ahead-looking statements might typically be recognized by means of phrases reminiscent of “will”, “proceed”, “intend”, “ponder”, “anticipate”, “potential”, “imagine”, “future”, or different related expressions that predict or point out future occasions or tendencies or that aren’t statements of historic issues, though not all forward-looking statements comprise 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 Vitality; statements concerning the event of Li-Cycle’s Hub services, together with the Rochester Hub; statements concerning the expansion of world demand for essential battery supplies and Li-Cycle’s place as a number one supplier of essential battery supplies; statements concerning Glencore’s off-take and advertising 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 means to shut the Observe 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 primarily based on varied assumptions, whether or not or not recognized on this communication, which Li-Cycle imagine are cheap within the circumstances. There might 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 troublesome to foretell and lots of of that are past the management of Li-Cycle, and usually are not ensures of future efficiency. Li-Cycle believes that these dangers and uncertainties embody, however usually are not restricted to, the next: Li-Cycle’s means to proceed as a going concern for the twelve-month interval after the date of submitting of its 2023 annual report on Kind 10-Ok; Li-Cycle’s incapability to develop the Rochester Hub, and the chance 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, scale back its monetary assets, lead to incurrence of debt, or show not to achieve success; extra funds required to fulfill Li-Cycle’s capital necessities sooner or later not being obtainable to Li-Cycle on commercially cheap phrases or in any respect when it wants them. These and different dangers and uncertainties associated to Li-Cycle’s enterprise are described in better element within the part entitled “Danger Elements” in its Annual Report on Kind 20-F filed with the U.S. Securities and Trade Fee and the Ontario Securities Fee in Canada on January 31, 2022 and will likely be set forth below the Firm’s Annual Report on Kind 10-Ok and Quarterly Experiences on Kind 10-Q sooner or later. Due to these dangers, uncertainties and assumptions, readers mustn’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 data, future developments or in any other case.
Contacts
Investor RelationsNahla A. AzmySheldon D’souzainvestors@li-cycle.com
MediaLouie Diazmedia@li-cycle.com
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