SCHEDULE 13D/A: Glencore's Dominant Stake in Li-Cycle Holdings Surges to 67.3% Following Convertible Note Adjustments

Glencore's beneficial ownership in Li-Cycle Holdings Corp. has increased to 67.3% of outstanding common shares due to adjustments in convertible note conversion prices and payment-in-kind interest.

Summary

• Glencore plc, Glencore International AG, and Glencore Canada Corporation collectively report beneficial ownership of 62,742,951 Common Shares of Li-Cycle Holdings Corp.
• This represents approximately 67.3% of Li-Cycle's outstanding Common Shares.
• The ownership calculation is based on 30,427,796 Common Shares outstanding as of December 31, 2024, plus 62,735,528 Common Shares issuable upon conversion of Glencore's notes, and 7,423 shares held by Mr. Kunal Sinha.
• The increase in beneficial ownership is primarily due to adjustments in the conversion prices of Glencore's outstanding secured and unsecured notes following Li-Cycle's ongoing sales of Common Shares pursuant to its ATM Program.
• The conversion price for the A&R Glencore Convertible Notes, with an original principal amount of $114,615,632.00, was adjusted to $75.31.
• The conversion price for the Senior Secured Convertible Note was adjusted to $4.09.
• Accrued and unpaid interest on both notes through December 31, 2024, was paid via Payment-in-Kind (PIK), increasing their aggregate principal amounts.
• The aggregate outstanding principal amount of the A&R Glencore Convertible Notes is $245,831,872.79 (inclusive of PIK interest).
• The aggregate outstanding principal amount of the Senior Secured Convertible Note is $81,573,643.75 (inclusive of PIK interest).

Sentiment

Score: 6

Explanation: The document reflects Glencore's increasing control and commitment to Li-Cycle, which can be seen as positive for Li-Cycle's stability and long-term backing. However, the underlying reasons for conversion price adjustments (ATM sales, PIK interest) suggest potential financial pressures or dilution for other shareholders, leading to a neutral-to-slightly positive score.

Positives

• Glencore's increased stake to 67.3% indicates a strong commitment and belief in Li-Cycle's long-term prospects, providing a significant vote of confidence.
• The continued financial support and deep involvement in Li-Cycle's capital structure by a major global player like Glencore can enhance stability and access to resources for Li-Cycle.

Negatives

• The adjustment of conversion prices, particularly the A&R Glencore Convertible Notes to $75.31 and the Senior Secured Convertible Note to $4.09, was triggered by ongoing sales of Common Shares by the Issuer via its ATM Program, which implies dilution for existing shareholders.
• Payment-in-Kind (PIK) interest increases the principal amount of the debt, which can be a burden if not managed effectively, and indicates that the company is not paying cash interest on these notes.

Risks

• Dilution risk for existing shareholders due to the ongoing sales of Common Shares by the Issuer through its ATM Program, which triggered the conversion price adjustments and increased Glencore's beneficial ownership.
• Increased debt burden for Li-Cycle due to Payment-in-Kind (PIK) interest, which adds to the principal amount of the convertible notes rather than reducing it through cash payments.
• High dependence on Glencore: With 67.3% beneficial ownership, Li-Cycle's strategic direction, operational decisions, and financial policies will be heavily influenced by Glencore, potentially limiting independent action.

Future Outlook

The document indicates that the conversion prices for the convertible notes are subject to future adjustments in accordance with their terms, suggesting ongoing monitoring and potential changes to Glencore's beneficial ownership percentage based on Li-Cycle's share activity.

Industry Context

This filing highlights the increasing consolidation and strategic investments within the battery recycling sector, as major players like Glencore deepen their involvement in companies like Li-Cycle to secure future supply chains for critical battery materials and capitalize on the growing demand for sustainable resource management.

Related Party Transactions

• Glencore Canada Corporation holds significant secured and unsecured convertible notes of Li-Cycle Holdings Corp., which are subject to conversion and interest payments.
• Mr. Kunal Sinha, Global Head of Recycling at the Glencore group, holds 7,423 Common Shares of Li-Cycle for the benefit of the Glencore Reporting Persons, which are expected to be transferred to them after vesting.

Stakeholder Impact

• **Shareholders**: Existing common shareholders face significant dilution risk due to the increase in Glencore's beneficial ownership to 67.3% and the ongoing ATM program sales that triggered conversion price adjustments. Glencore's majority control may also limit the influence and voting power of other shareholders.
• **Creditors**: The payment of interest via Payment-in-Kind (PIK) increases the principal amount of the convertible notes, potentially increasing Li-Cycle's overall debt burden, which could impact the company's financial leverage and risk profile for other creditors.

Next Steps

• Future adjustments to the conversion prices of the A&R Glencore Convertible Notes and Senior Secured Convertible Note in accordance with their terms.
• Potential transfer of 7,423 Common Shares from Mr. Kunal Sinha to the Reporting Persons after vesting.

Key Dates

Recommendation

Keywords

Li-Cycle Holdings Corp., Glencore, SEC Filing, Schedule 13D, Beneficial Ownership, Convertible Notes, Debt Conversion, Equity Stake, Battery Recycling, ATM Program, PIK Interest, Share Dilution, Strategic Investment