SCHEDULE 13D/A: Glencore's Stake in Li-Cycle Holdings Corp. Jumps to Nearly 70% Following Note Conversion Price Adjustments

Glencore plc and its subsidiaries have significantly increased their beneficial ownership in Li-Cycle Holdings Corp. to 69.8% following adjustments to the conversion prices of their outstanding convertible notes.

Summary

• Glencore plc, Glencore International AG, and Glencore Canada Corporation collectively report beneficial ownership of 82,454,779 Common Shares of Li-Cycle Holdings Corp.
• This represents approximately 69.8% of Li-Cycle's outstanding Common Shares, calculated based on 35,603,217 Common Shares outstanding as of January 16, 2025, plus the newly issuable shares.
• The ownership includes 82,447,356 Common Shares issuable upon conversion of Senior Secured Convertible Note and A&R Glencore Convertible Notes held by Glencore Canada Corporation, plus 7,423 Common Shares previously awarded to Mr. Kunal Sinha under the Issuer's 2021 Incentive Award Plan.
• Conversion prices for the notes were adjusted following an underwritten public offering by Li-Cycle: A&R Convertible Note No. 1 (original principal $116,551,170.40) adjusted to $2.35, A&R Convertible Note No. 2 (original principal $114,615,632.00) adjusted to $50.25, and the Senior Secured Convertible Note adjusted to $3.05.
• The aggregate outstanding principal amounts are $245,831,872.79 for A&R Glencore Convertible Notes and $81,573,643.75 for the Senior Secured Convertible Note, both inclusive of PIK interest.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive for Glencore as it solidifies its control and potentially gains more favorable conversion terms. For Li-Cycle, it's neutral to slightly negative due to the implied dilution for other shareholders, but the capital raise itself (which triggered this) would have been positive.

Positives

• Glencore's increased beneficial ownership to 69.8% solidifies its control and strategic interest in Li-Cycle, aligning with its long-term investment goals.
• The adjustment of conversion prices, particularly for A&R Convertible Note No. 1 to $2.35 and the Senior Secured Convertible Note to $3.05, makes conversion more favorable for Glencore at lower share prices, potentially increasing their equity stake at a lower effective cost.

Negatives

• The significant increase in Glencore's beneficial ownership to 69.8% implies substantial dilution for existing Li-Cycle shareholders upon conversion of the notes.
• One of the A&R Convertible Notes (No. 2) has a high adjusted conversion price of $50.25, which might not be immediately convertible under current market conditions, potentially limiting the full conversion of Glencore's notes.

Risks

• Conversion prices for the notes are subject to future adjustments in accordance with their terms, introducing uncertainty regarding the final number of shares Glencore will receive and the ultimate dilution impact.

Future Outlook

The conversion prices for the outstanding secured and unsecured notes held by Glencore Canada Corporation are subject to future adjustments in accordance with the terms of the applicable notes.

Management Comments

• "Mr. Sinha is the Global Head of Recycling at the Glencore group and holds the securities reported herein for the benefit of the Reporting Persons, and will, after vesting, if applicable, transfer the securities directly to the Reporting Persons."

Industry Context

This filing highlights Glencore's deepening strategic investment in Li-Cycle Holdings Corp., a key player in the battery recycling industry. Glencore's increased stake underscores its commitment to the circular economy and securing future supplies of critical battery materials, aligning with broader industry trends towards sustainable resource management and electric vehicle supply chain development.

Related Party Transactions

• Glencore Canada Corporation holds significant secured and unsecured convertible notes of Li-Cycle Holdings Corp., making the conversion and related adjustments a transaction between related parties.
• Mr. Kunal Sinha, Global Head of Recycling at Glencore, holds Li-Cycle shares for the benefit of the Glencore Reporting Persons, indicating an internal related party arrangement.

Stakeholder Impact

• Shareholders (excluding Glencore): Potential significant dilution due to the conversion of Glencore's notes into a large number of new Common Shares, increasing the total outstanding share count.
• Glencore: Increased control and strategic influence over Li-Cycle Holdings Corp. through a substantial increase in beneficial ownership, potentially at more favorable conversion rates for some notes.
• Li-Cycle Holdings Corp.: The conversion of notes into equity strengthens the company's balance sheet by reducing debt, but at the cost of significant equity dilution.

Next Steps

• Future adjustments to the conversion prices of the notes in accordance with their terms.
• Transfer of 7,423 Common Shares from Mr. Kunal Sinha to the Reporting Persons after vesting, if applicable.

Key Dates

Keywords

Li-Cycle Holdings Corp., Glencore, SEC Filing, Schedule 13D, Beneficial Ownership, Convertible Notes, Conversion Price Adjustment, Battery Recycling, Strategic Investment, Dilution