SCHEDULE: Glencore Boosts Li-Cycle Stake to 62.6% Amid Debt Restructuring

Glencore Canada Corporation increased its beneficial ownership in Li-Cycle Holdings Corp. to 62.6% following a debt reduction and collateral release agreement.

Summary

• Glencore Canada Corporation, a subsidiary of Glencore plc, now beneficially owns 74,587,088 common shares of Li-Cycle Holdings Corp., representing approximately 62.6% of the outstanding common shares.
• This ownership includes 74,579,665 shares issuable upon conversion of Glencore Notes and 7,423 shares previously awarded to Mr. Kunal Sinha.
• The increase in ownership follows the approval of an Equity and Asset Purchase Agreement (EAPA) Transaction and Credit Bid by Canadian and U.S. courts.
• Li-Cycle's Second A&R Convertible Note No. 1 principal amount was reduced by $30,867,124, resulting in a new principal of $93,192,007.32, excluding accrued interest.
• Security interests on certain 'Transferred Collateral' (assets and equity interests) were released as part of the agreement.
• Mr. Kunal Sinha, Glencore's Global Head of Recycling, resigned from Li-Cycle's board of directors on August 7, 2025.

Sentiment

Score: 3

Explanation: The filing indicates severe financial distress and significant dilution for existing shareholders due to debt restructuring and Glencore's increased control. While Glencore's continued support is a positive, the underlying financial issues are substantial.

Positives

• Significant debt reduction of $30,867,124 on Second A&R Convertible Note No. 1.
• Continued strong support and increased ownership by Glencore, a major strategic partner.
• Resolution of certain legal and financial restructuring through court-approved agreements (CCAA and Chapter 15).
• Streamlining of collateral arrangements through the release of security interests on transferred assets.

Negatives

• Li-Cycle is undergoing creditor protection proceedings in Canada (CCAA) and a Chapter 15 proceeding in the U.S., indicating financial distress.
• The substantial increase in Glencore's ownership to 62.6% suggests significant dilution for existing minority shareholders.
• The debt reduction is part of a broader restructuring, implying previous financial challenges.
• Accrued but unpaid interest on both Note 1 ($7,797,497.74) and Note 2 ($5,127,154.25) indicates ongoing interest burden.

Risks

• Financial Distress: The ongoing CCAA and Chapter 15 proceedings highlight significant financial challenges and potential for further restructuring or insolvency.
• Dilution: The conversion of Glencore Notes into a majority equity stake (62.6%) significantly dilutes the ownership of other shareholders.
• Dependence on Glencore: The company's deep financial and operational ties to Glencore, including debt conversion and asset sales, create high dependence on this single strategic partner.
• Operational Challenges: The need for debt restructuring and asset sales suggests underlying operational or market challenges.
• Legal and Regulatory Uncertainty: The company is subject to ongoing court proceedings (CCAA, Chapter 15), which can introduce legal and regulatory uncertainties.

Future Outlook

The filing primarily details past and current transactions related to debt restructuring and beneficial ownership changes. It does not provide explicit forward-looking statements or guidance regarding future financial performance or strategic direction beyond the immediate effects of the restructuring.

Industry Context

This filing reflects a significant restructuring event for Li-Cycle, a company in the nascent but growing battery recycling industry. The increased stake by Glencore, a global mining and commodities giant, underscores the strategic importance of critical minerals and recycling to established players. This could signal a trend of larger companies consolidating or taking controlling stakes in emerging recycling firms to secure supply chains for battery materials.

Comparison to Industry Standards

• The restructuring and significant debt-to-equity conversion indicate that Li-Cycle faced substantial financial challenges, which is not uncommon for early-stage companies in capital-intensive industries like battery recycling.
• Glencore's move to take a majority stake is comparable to strategic investments seen in other critical mineral sectors, where large players secure future supply or technology through equity control, such as BHP's investments in nickel or lithium projects.
• The use of CCAA and Chapter 15 proceedings for creditor protection is a standard legal mechanism for companies undergoing significant financial restructuring in Canada and the U.S., respectively, similar to cases involving other distressed industrial or technology firms.

Management Changes

Legal Proceedings

• The Company and certain subsidiaries are undergoing creditor protection proceedings under the Companies Creditors Arrangement Act (Canada) (CCAA Proceeding).
• An order from the CCAA Court dated August 1, 2025, was recognized by the United States Bankruptcy Court for the Southern District of New York dated August 4, 2025, in a Chapter 15 Proceeding.

Related Party Transactions

• Glencore Canada Corporation (GCC), Glencore International AG (GIAG), and Kristahold AG are all affiliates of Glencore plc and are engaging in significant transactions with Li-Cycle, including debt conversion, asset purchase agreements, and loan agreements.
• Mr. Kunal Sinha, who resigned from the board, is the Global Head of Recycling at the Glencore group and holds securities for the benefit of the Reporting Persons (Glencore entities).

Stakeholder Impact

• Shareholders: Significant dilution for existing minority shareholders due to Glencore's increased ownership to 62.6% through debt conversion.
• Creditors: The restructuring involves a reduction in principal amount for one convertible note and a release of collateral, impacting the terms for certain creditors.
• Employees: Not directly addressed, but financial restructuring can sometimes lead to operational changes that affect employees.
• Customers/Suppliers: Not directly addressed, but the stability provided by Glencore's increased involvement could potentially stabilize future operations.

Next Steps

• GCC will promptly execute and deliver additional instruments, terminations, and lien releases as reasonably requested by the Company or GIAG to evidence and release security interests on transferred assets.
• The Company will promptly execute and deliver additional instruments, terminations, and lien releases as reasonably requested by GIAG to evidence and release security interests on transferred assets and to evidence the Borrower Assignment.
• Li-Cycle Germany will prepare and deliver notifications of release for relevant account banks upon GCC's request.
• GCC will destroy blank notices delivered by Li-Cycle Germany pursuant to the German Security Assignment Agreement.
• The Collateral Agent will return and retransfer the original share certificate for Li-Cycle Europe shares to the relevant Swiss Released Party.

Key Dates

Recommendation

The filing reveals that Li-Cycle is under creditor protection in both Canada and the U.S., indicating severe financial distress. Glencore's acquisition of a 62.6% stake through debt conversion implies significant dilution for existing shareholders. While Glencore's support provides some stability, the underlying financial issues and the substantial dilution make the stock a high-risk proposition with limited upside for current minority shareholders. The company's future remains highly dependent on Glencore's strategic direction and further restructuring efforts.

Keywords

Li-Cycle, Glencore, SEC Filing, Schedule 13D, Beneficial Ownership, Debt Restructuring, Convertible Notes, Creditor Protection, CCAA, Chapter 15, Collateral Release, Equity and Asset Purchase Agreement, Recycling, Battery Recycling, Critical Minerals