SCHEDULE 13D/A: Glencore Boosts Stake in Li-Cycle to 65.9% Amidst Restructuring and Acquisition Bid

Glencore plc and its subsidiaries have significantly increased their beneficial ownership in Li-Cycle Holdings Corp. to 65.9% as Li-Cycle undergoes creditor protection and Glencore pursues an acquisition via a credit bid.

Summary

• Glencore plc, Glencore International AG, and Glencore Canada Corporation collectively hold beneficial ownership of 85,880,091 Common Shares of Li-Cycle Holdings Corp., representing approximately 65.9% of the outstanding shares.
• This ownership includes 85,872,668 Common Shares issuable upon conversion of Glencore Notes held by Glencore Canada Corporation, plus 7,423 Common Shares awarded to Mr. Kunal Sinha under Li-Cycle's 2021 Incentive Award Plan.
• Li-Cycle Holdings Corp. has sought and obtained initial creditor protection under Canada's Companies' Creditors Arrangement Act (CCAA) and commenced ancillary insolvency proceedings under Chapter 15 of the US Bankruptcy Code.
• Glencore Canada Corporation has entered into an Equity and Asset Purchase Agreement (EAPA) with Li-Cycle to acquire certain assets and equity interests through a credit bid, subject to CCAA Court approval.
• The credit bid will be payable by crediting amounts owing under a DIP Term Sheet and reducing the outstanding principal of existing convertible notes held by Glencore.
• Li-Cycle will seek CCAA Court approval for the EAPA as a 'stalking horse bid' and will implement Sale and Investment Solicitation Procedures (SISP).
• Glencore has disclosed a history of significant legal proceedings, including fines and forfeitures totaling hundreds of millions of dollars related to past violations of the US Foreign Corrupt Practices Act, commodity price manipulation, and bribery in various jurisdictions.
• Recent legal resolutions include the early conclusion of DOJ compliance monitorships in March 2025 and the closure of a Swiss criminal investigation in August 2024 with a CHF 2 million fine and US$150 million compensation claim, which Glencore agreed not to appeal.

Sentiment

Score: 4

Explanation: The sentiment is mixed. For Li-Cycle, the situation is negative due to insolvency. For Glencore, it's a strategic move to acquire a distressed asset, which could be positive long-term, but the document also details extensive past legal issues and associated penalties, which weigh down overall sentiment.

Positives

• Glencore is strategically positioned to acquire key assets of Li-Cycle, potentially consolidating its presence in the battery recycling sector.
• The early conclusion of Glencore's DOJ compliance monitorships in March 2025 indicates progress in enhancing its compliance program.
• The closure of the Swiss and Dutch investigations provides a degree of finality regarding some of Glencore's past legal issues.

Negatives

• Li-Cycle Holdings Corp. is undergoing insolvency proceedings under CCAA and Chapter 15, indicating significant financial distress.
• Glencore has a history of substantial fines and penalties for past misconduct, including bribery and market manipulation, totaling over a billion dollars across various jurisdictions.
• The acquisition of Li-Cycle is occurring in a distressed context, which may reflect underlying challenges in the battery recycling industry or Li-Cycle's specific operations.

Risks

• The EAPA Transaction is subject to final approval by the CCAA Court, and the outcome of the Sale and Investment Solicitation Procedures (SISP) could lead to alternative bids.
• Regulatory conditions must be satisfied for the conversion of Glencore Notes into Common Shares.
• The ongoing restructuring of Li-Cycle could face unforeseen challenges or delays, impacting the final terms and consummation of the EAPA Transaction.
• Glencore's past legal issues, despite recent resolutions, could still pose reputational or operational risks.

Future Outlook

Glencore intends to consummate the Equity and Asset Purchase Agreement (EAPA) transaction, subject to CCAA Court approval and the outcome of the Sale and Investment Solicitation Procedures (SISP). The Reporting Persons may propose or suggest additional actions depending on the unfolding of Li-Cycle's CCAA proceeding and may engage in discussions with other stakeholders.

Management Comments

• Glencore does not admit the findings of the Office of the Attorney General of Switzerland (OAG) but, in the interests of resolving this matter, has agreed not to appeal the summary penalty order.
• Glencore has cooperated fully with the investigation by the OAG and taken significant measures to enhance its compliance program, particularly since 2016, which were taken into account as mitigating factors.

Industry Context

This filing highlights Glencore's strategic move to deepen its involvement in the battery recycling industry through a significant stake and potential acquisition of Li-Cycle, a company focused on lithium-ion battery recycling. This aligns with broader industry trends towards circular economy principles and securing critical materials for the growing electric vehicle and renewable energy sectors. Glencore, as a major diversified natural resource company, is expanding its footprint beyond traditional mining and trading into the downstream processing and recycling of key commodities.

Comparison to Industry Standards

• The acquisition of a distressed asset like Li-Cycle by a major player like Glencore is a common strategy in the commodities and industrial sectors to gain market share or secure supply chains at a potentially lower cost.
• Glencore's beneficial ownership of 65.9% in Li-Cycle, if the conversion and acquisition proceed, would represent a controlling stake, a typical outcome for strategic investors in restructuring scenarios.
• The use of a 'stalking horse bid' and Sale and Investment Solicitation Procedures (SISP) is a standard practice in Canadian insolvency proceedings (CCAA) to establish a baseline bid and maximize value for creditors.
• Glencore's extensive history of legal proceedings and the substantial fines incurred, while significant, are not entirely unprecedented for large, global commodity trading firms operating in complex international jurisdictions, though the scale of these penalties is notable.

Legal Proceedings

• On May 24, 2022, Glencore International AG pled guilty in the Southern District of New York to one count of conspiracy to violate the US Foreign Corrupt Practices Act, agreeing to $428,521,173 in fines and $272,185,792 in forfeiture and disgorgement.
• On May 24, 2022, Glencore AG pled guilty in the District of Connecticut to one count of conspiracy to commit commodity price manipulation, agreeing to a fine of $341,221,682 and forfeiture of $144,417,203.
• Both DOJ agreements provided for the appointment of an independent compliance monitor for three years, which concluded early in March 2025.
• On May 24, 2022, Glencore International AG, Glencore AG, and Chemoil Corporation resolved an investigation by the CFTC, agreeing to pay $333,548,040 in civil penalties and disgorgement.
• On May 24, 2022, Glencore agreed to pay $39,598,367 under a resolution with the Brazilian Federal Prosecutors Office in connection with a bribery investigation.
• On June 21, 2022, Glencore Energy UK Limited pled guilty in Southwark Crown Court to five counts of bribery and two counts of failure to prevent bribery under the UK Bribery Act 2010, and was sentenced on November 3, 2022, to pay GBP 280,965,092.95.
• On August 5, 2024, the Office of the Attorney General of Switzerland (OAG) closed its criminal investigation against Glencore International, imposing a fine of CHF 2 million and a compensation claim of US$150 million for failing to prevent bribery in the Democratic Republic of the Congo.
• The parallel investigation by the Dutch Prosecution Service was also concluded and dismissed following the Swiss resolution.

Related Party Transactions

• Glencore Canada Corporation, a wholly-owned indirect subsidiary of Glencore plc and Glencore International AG, is entering into an Equity and Asset Purchase Agreement (EAPA) and holds secured and unsecured notes of Li-Cycle Holdings Corp. (the 'Glencore Notes').
• The EAPA transaction involves a credit bid where Glencore Canada Corporation will acquire assets and equity interests from Li-Cycle by crediting amounts owed under a DIP Term Sheet and reducing the principal of the Glencore Notes.
• Mr. Kunal Sinha, Global Head of Recycling at the Glencore group, holds 7,423 Common Shares of Li-Cycle for the benefit of the Reporting Persons, which will be transferred to them after vesting.

Stakeholder Impact

• **Shareholders of Li-Cycle:** Significant dilution and potential loss of control due to Glencore's increased beneficial ownership and the ongoing insolvency proceedings, which may result in a substantial reduction or elimination of equity value.
• **Creditors of Li-Cycle:** The CCAA and Chapter 15 proceedings will dictate the repayment terms and priorities for creditors, with Glencore, as a major secured creditor, potentially converting debt into equity.
• **Employees of Li-Cycle:** The restructuring and potential acquisition by Glencore could lead to changes in management, operations, and workforce, depending on Glencore's integration plans.
• **Glencore Shareholders:** The transaction represents a strategic investment in the battery recycling sector, potentially enhancing Glencore's long-term position in critical materials, but also carries the risks associated with acquiring a distressed asset and integrating it into existing operations.
• **Customers and Suppliers of Li-Cycle:** The restructuring and potential change of ownership could impact existing contracts, supply chains, and future business relationships.

Next Steps

• Li-Cycle will seek an order from the CCAA Court to approve the EAPA as a 'stalking horse bid' and to implement the Sale and Investment Solicitation Procedures (SISP).
• If the EAPA is selected as the Successful Bid, Li-Cycle will seek final approval of the EAPA from the CCAA Court.
• Upon obtaining CCAA Court approval, Glencore Canada Corporation and Li-Cycle intend to consummate the EAPA Transaction.
• Glencore may engage in further discussions or negotiations with other debtholders, shareholders, and stakeholders of Li-Cycle depending on the CCAA proceeding.

Key Dates

Keywords

Glencore, Li-Cycle Holdings Corp., Schedule 13D/A, Beneficial Ownership, Credit Bid, Insolvency, CCAA, Chapter 15, Battery Recycling, SEC Filing, Corporate Restructuring, Foreign Corrupt Practices Act, Commodity Price Manipulation, Bribery, Compliance Monitor