4/A: Glencore Entities Amend Filing to Reflect Li-Cycle Holdings Corp. Convertible Note Transaction

Glencore plc, Glencore International AG, and Glencore Canada Corporation amend their SEC filing to include EDGAR codes for Glencore Canada Corporation, related to a senior secured convertible note and amended convertible notes with Li-Cycle Holdings Corp.

Summary

• Glencore plc, Glencore International AG, and Glencore Canada Corporation filed an amendment to a Form 4 related to Li-Cycle Holdings Corp.
• The amendment includes EDGAR codes for Glencore Canada Corporation, which was previously included as a joint filer.
• The original filing concerned a Note Purchase Agreement where Li-Cycle will issue a $75 million senior secured convertible note to Glencore Canada Corporation.
• The closing of the transaction is expected around March 25, 2024.
• The note can be converted into common shares at $0.53 per share, potentially resulting in 141,509,433 shares.
• Existing convertible notes will be amended and restated into two tranches of A&R Convertible Notes.
• The A&R Convertible Notes have an aggregate outstanding principal of $225,357,584.66, including $25,357,584.66 in PIK interest.
• One A&R Convertible Note will have a principal amount of $116,551,170.40, and the other will have $108,806,414.26 plus accrued interest.
• The A&R Convertible Notes can be converted into common shares at $9.95 per share, potentially resulting in 22,649,003 shares.
• The conversion price of the A&R Convertible Notes may be adjusted based on certain events related to Li-Cycle's Rochester hub.
• The A&R Convertible Notes accrue interest payable semi-annually and are due on May 31, 2027.
• Upon certain redemptions, Glencore Canada Corporation may receive warrants to acquire common shares.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as it reflects continued investment from a major player like Glencore, but the complex terms and dependence on the Rochester hub introduce some uncertainty.

Positives

• Glencore's continued investment in Li-Cycle through the purchase of the senior secured convertible note demonstrates confidence in the company's future.
• The potential conversion of the notes into common shares could provide Li-Cycle with additional equity capital.

Negatives

• The conversion price of the A&R Convertible Notes is significantly higher than the senior secured convertible note, potentially limiting the conversion upside for Glencore.
• The adjustment of the A&R Convertible Notes conversion price is contingent on the Rochester hub's performance, introducing uncertainty.

Risks

• The closing of the transaction is subject to applicable regulatory conditions, which could delay or prevent the transaction from occurring.
• The conversion price of the A&R Convertible Notes is subject to adjustments based on the Rochester hub's performance, which could negatively impact the value of the notes.
• Li-Cycle's ability to pay interest on the notes is dependent on its financial performance, which could be impacted by various factors.

Future Outlook

The closing of the transaction is expected to occur on or about March 25, 2024. The terms of the A&R Convertible Notes will be modified based on the performance of the Rochester hub.

Industry Context

This announcement reflects ongoing investment and financial restructuring within the battery recycling industry, as companies like Li-Cycle seek capital to fund operations and expansion. Glencore's involvement highlights the strategic importance of securing access to battery materials and recycling capabilities.

Comparison to Industry Standards

• Convertible notes are a common financing tool in the resource and recycling industries, particularly for companies with high growth potential but uncertain near-term profitability.
• The conversion prices and interest rates are within the typical range for such instruments, but the specific terms are tailored to Li-Cycle's circumstances and Glencore's investment objectives.
• Comparable companies in the battery recycling space, such as Redwood Materials and Ascend Elements, have also attracted significant investment through a combination of equity and debt financing.

Related Party Transactions

• The transaction involves Glencore Canada Corporation, a related party, purchasing a senior secured convertible note from Li-Cycle.

Stakeholder Impact

• Shareholders: Potential dilution from the conversion of the notes into common shares.
• Creditors: The senior secured convertible note will have priority over existing unsecured debt.
• Employees: The investment could provide greater job security and opportunities for growth.

Next Steps

• Closing of the $75 million transaction is expected around March 25, 2024.
• Implementation of the amended and restated terms of the A&R Convertible Notes.
• Monitoring the performance of the Rochester hub to determine potential adjustments to the A&R Convertible Notes conversion price.

Key Dates