Li-Cycle Broadcasts $75 Million Strategic Funding from Glencore

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Builds upon present 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 present 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 “Word Buy Settlement”) to situation a senior secured convertible notice in an mixture principal quantity of $75 million (the “Word”) 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 assessment course of. This financing enhances Li-Cycle and Glencore’s present long-term, strategic partnership and represents an interim step in our funding technique to assist 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 Govt Chairman, commented: “As a part of our beforehand introduced complete assessment, Li-Cycle is continuous to assessment 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 development 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 our sustainable, protected, and patented recycling know-how.”

Kunal Sinha, World Head of Recycling for Glencore, and Non-Govt Director of Li-Cycle’s Board of Administrators, commented: “Glencore is dedicated to bringing scalable and sustainable circularity into the availability chain of battery supplies. Our unique funding in Li-Cycle, alongside key business agreements, fashioned a part of this technique. At present, we’re happy to additional assist Li-Cycle by 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 impartial 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 sturdy course of to assessment and consider potential monetary and strategic options obtainable to the Firm. After a cautious assessment and evaluation of the options recognized by the SC by 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 Type 10-Okay for the yr ended December 31, 2023.

Lengthy-Time period World Partnership

As beforehand introduced, Glencore has designated Li-Cycle as considered one of 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 produce a world 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 the acquisition of a convertible notice (the “Present Word”).

Glencore is a battery feedstock accomplice 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 present companions by 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 end in Glencore buying from the Firm a senior secured convertible notice within the mixture principal quantity of $75 million. The Word will mature on the fifth anniversary of closing and will probably be convertible into widespread shares of the Firm at an preliminary conversion worth of $0.53 per Li-Cycle widespread share. Li-Cycle will probably be entitled, at its election, to pay curiosity on the Word 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 Word is redeemable on the choice of Li-Cycle at a redemption worth equal to 100% of the then excellent principal quantity of the Word being redeemed plus accrued and unpaid curiosity. Commencing with the supply of monetary 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 Word in an quantity (the “ECF Quantity”) equal to a specified proportion of the surplus money movement 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 attributable to an elective or obligatory redemption, the Firm will probably be required to situation to Glencore a variety of warrants entitling Glencore to amass a variety of widespread shares of Li-Cycle equal to the principal quantity of the Word 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 Word so redeemed and expiring on the sixth anniversary of the preliminary cut-off date (the “Redemption Warrants”). As safety for the Firm’s obligations beneath the Word, 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, america, Switzerland and Germany have agreed to ensure the Firm’s obligations beneath the Word 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 Word will even be topic to sure reporting and affirmative and detrimental 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 Word.

As well as, Li-Cycle and Glencore have agreed to amend and restate the phrases of the Present Word, in two tranches, every of which can embody new phrases that come into impact upon the prevalence of sure future occasions (the Present Word, together with excellent PIK notes, as so amended and restated in two tranches, the “A&R Notes”). The primary A&R Word will embody modifications to the phrases of the Present Word 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 challenge mortgage financing for the Rochester Hub, and (b) December 31, 2024. The second A&R Word will embody modifications to the phrases of the Present Word 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) development prices exceeding the development finances set forth within the challenge mortgage financing, and (c) June 1, 2026. At every Modification Date the next phrases of every A&R Word, which mirror the Word, 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 Word, obligatory 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 Word), and the Firm will present ensures and safety for the A&R Notes in line with the Word. 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 Word).

Glencore is permitted to switch the Word, the Redemption Warrants and any widespread shares issued upon conversion of the Word 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 buyers, 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 Word Buy Settlement entered in reference to this transaction and any transferee that will beneficially personal not less than 5% of the widespread shares (on an as-converted foundation) following the switch will probably be topic to a standstill settlement. The widespread shares issued upon conversion of the Word or train of any of the Redemption Warrants are additionally topic to a 12-month lock-up from the cut-off date.

Glencore has additionally dedicated to not purchase helpful possession of further widespread 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 impartial beneath 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 beneath NYSE guidelines.

The issuance and sale of the Word 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 beneath, and is anticipated to shut on or about March 25, 2024. Extra info concerning this announcement could also be present in a Type 8-Okay that will probably be filed with the U.S. Securities and Trade Fee and in a cloth 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 because of the anticipated shorter time period between the signing of the settlement with Glencore and the anticipated closing of the funding, in an effort 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 won’t be deemed an “Buying Particular person”, both individually or collectively, solely by advantage of, or because of, (a) Glencore Canada and GC Associates’ helpful possession of the widespread shares of Li-Cycle issuable upon conversion of the Present Word, as could also be amended and restated now and again, together with such widespread 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 Word or the issuance to Glencore Canada and GC Associates and the train of any warrants upon redemption of the Present Word in accordance with its phrases; (b) the legitimate and binding approval, execution, and supply of the Word Buy Settlement and the issuance of the Word; (c) the issuance to Glencore Canada and GC Associates of the widespread shares of Li-Cycle upon conversion of the Word, in complete or half, together with any widespread 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 Word Buy Settlement, the notice buy settlement for the Present Word, the Present Word or the Word (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 into the helpful proprietor of such variety of further widespread shares of Li-Cycle representing in extra of 5.0% of the Firm’s widespread shares excellent as of the date of the Word Buy Settlement, apart 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 helpful possession of widespread shares of Li-Cycle in accordance with the switch restrictions set forth within the notice buy settlement for the Present Word or the Word Buy Settlement, as relevant, together with helpful possession acquired because 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 Word, dated as of September 29, 2021, issued to Koch (the “Koch Word”), in alternate for the Firm agreeing to amend the Koch Word, as of the closing of the Glencore funding, to incorporate penalty curiosity upon an occasion of default in line with the penalty curiosity provision of the Word and to take away the ground and ceiling from the definition of SOFR within the Koch Word.

New York Inventory Trade Exception from Shareholder Approval

Though the issuance of the Word would typically require approval of Li-Cycle’s shareholders beneath the shareholder approval coverage of the NYSE previous to the issuance of the widespread shares contemplated by the Word, the Firm requested and obtained affirmation from the NYSE on March 1, 2024 that the NYSE won’t object to the Firm’s reliance on the monetary viability exception to the NYSE’s shareholder approval coverage pursuant to NYSE Listed Firm Handbook 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 impartial and disinterested members of the Board, decided that the delay related to acquiring a shareholder vote previous to consummation of the issuance of the Word would severely 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 Word, notifying them of its settlement with Glencore to, amongst different issues, situation the Word and amend and restate the Present Word and its intention to situation widespread shares upon conversion of the Word, 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 celebration 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 impartial 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 impartial members of the Board of Administrators of Li-Cycle, performing in good religion, having unanimously decided that Li-Cycle is in severe monetary problem, 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 all over the world, Li-Cycle’s mission is to recuperate vital battery-grade supplies to create a home closed-loop battery provide chain for a clear vitality future. The Firm leverages its revolutionary, 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 accommodates a variety of worthwhile 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-Trying 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 Trade Act of 1934, as amended, and relevant Canadian securities legal guidelines. Ahead-looking statements could typically be recognized by way of phrases corresponding to “will”, “proceed”, “intend”, “ponder”, “count on”, “potential”, “consider”, “future”, or different comparable 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 worldwide 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 capacity to shut the Word 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 numerous assumptions, whether or not or not recognized on this communication, which Li-Cycle consider are cheap within the circumstances. There might be no assurance that such estimates or assumptions will show to be right and, because of this, precise outcomes or occasions could 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 aren’t ensures of future efficiency. Li-Cycle believes that these dangers and uncertainties embody, however aren’t restricted to, the next: Li-Cycle’s capacity to proceed as a going concern for the twelve-month interval after the date of submitting of its 2023 annual report on Type 10-Okay; Li-Cycle’s incapacity to develop the Rochester Hub, and the danger that these capital initiatives won’t 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 might disrupt its enterprise, trigger dilution to its shareholders, cut back its monetary assets, end in incurrence of debt, or show not to achieve success; further 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 larger element within the part entitled “Threat Components” in its Annual Report on Type 20-F filed with the U.S. Securities and Trade Fee and the Ontario Securities Fee in Canada on January 31, 2022 and will probably be set forth beneath the Firm’s Annual Report on Type 10-Okay and Quarterly Stories on Type 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 because of new info, future developments or in any other case.

Contacts

Investor Relations
Nahla A. Azmy
Sheldon D’souza
buyers@li-cycle.com

Media
Louie Diaz
media@li-cycle.com

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