Li-Cycle Holdings Corp. (NYSE: LICY) stock jumped over 45% on Tuesday after the company secured a $75 million investment from a Glencore affiliate.
Li-Cycle (LICY), a leading lithium-ion battery recycling company, has announced plans to issue a $75 million senior secured convertible note to an affiliate of Glencore (OTC: GLNCY) plc (LON: GLEN). The move, slated to close around March 25, 2024, solidifies the ongoing collaboration between the two companies and highlights Glencore’s dedication to promoting sustainability in the battery materials industry.
The new agreement modifies the terms of a previous Glencore convertible note, extending its maturity and adjusting its pricing based on market conditions. This financial maneuver aims to improve Li-Cycle’s financial position during a comprehensive review period and the temporary pause on its Rochester Hub project.
Glencore’s investment is part of a broader partnership with Li-Cycle, which designates the latter as one of Glencore’s preferred recycling partners. The partnership includes a commercial arrangement to create an integrated platform to supply customers with primary and recycled critical battery materials. Glencore’s role extends to providing battery feedstock for Li-Cycle’s facilities and marketing the resulting products and by-products of the recycling process.
Convertible Note Details
The convertible note will mature five years after closing and offers the possibility of conversion into Li-Cycle common shares at an initial rate of $0.53 per share. Li-Cycle reserves the right to provide interest payment on the note in cash or via payment-in-kind (PIK), with interest rates determined by the Secured Overnight Financing Rate (SOFR) plus a margin.
Li-Cycle has pledged a security interest in most of its assets to Glencore per the agreement. The company has also granted Glencore registration rights related to the note. Furthermore, the deal includes modification and re-issuance of the current note in two forthcoming installments, each governed by conditions tied to specific events.
The evaluation of potential strategic alternatives has been conducted under the purview of Li-Cycle’s board, facilitated by a Special Committee excluding Glencore’s representative and with support from Moelis (NYSE: MC) & Company LLC.
Li-Cycle will release its full-year 2023 financial and operational results by March 15, 2024, as part of its Annual Report on Form 10-K for the year ended December 31, 2023.
Li-Cycle (NYSE: LICY) Stock Price Action
LICY stock soared 46.32% to close at $0.59 on Tuesday. The traders had exchanged hands with 60,812,683 (60.81 million) shares compared to the average daily trading volume of 3.32 million.
