8-K: Li-Cycle Appoints Marcum Canada LLP as New Independent Auditor, Sets Reconvened Shareholder Meeting

Li-Cycle has selected Marcum Canada LLP as its new independent auditor and will hold a reconvened shareholder meeting on October 15, 2024, to vote on the appointment.

Summary

• Li-Cycle has appointed Marcum Canada LLP as its new independent registered public accounting firm, replacing KPMG.
• The decision was made by the Audit Committee of the Board of Directors after a comprehensive review.
• Shareholders will vote on the appointment of Marcum at a reconvened annual and special meeting on October 15, 2024.
• The meeting was previously adjourned on May 23, 2024, due to the delay in selecting a new auditor.
• The record date for shareholders entitled to vote at the reconvened meeting is September 10, 2024.
• A supplemental proxy statement will be filed with the SEC, detailing the proposal to appoint Marcum and authorize the Board to fix their remuneration.
• The company will distribute proxy materials, including a paper copy of a proxy supplement, to shareholders.
• The deadline to vote via the internet or by phone is October 10, 2024.

Sentiment

Score: 5

Explanation: The document is neutral to slightly negative. While the appointment of a new auditor is a necessary step, the circumstances surrounding the change and the company's ongoing challenges temper any positive sentiment. The numerous risk factors also contribute to a cautious outlook.

Positives

• The appointment of a new auditor resolves a key issue that led to the adjournment of the previous shareholder meeting.
• The selection of Marcum is expected to provide expertise and understanding of Li-Cycle's industry and business.
• The reconvened shareholder meeting provides an opportunity for shareholders to vote on the new auditor and move forward.
• The company is providing clear information and deadlines for shareholders to participate in the voting process.

Negatives

• The need to change auditors indicates a potential issue with the previous auditor, KPMG.
• The adjournment of the initial shareholder meeting caused a delay in the company's governance process.
• The company has a history of losses and expects significant expenses, which could impact its financial stability.

Risks

• Li-Cycle faces risks related to its ability to source, recover, and recycle lithium-ion batteries efficiently.
• The company's global growth strategy may not be implemented successfully or on time.
• The development of the Rochester Hub and other projects may face delays or not meet expectations.
• Li-Cycle may not be able to secure sufficient funding to meet its liquidity needs and capital requirements.
• The company's ability to continue as a going concern is uncertain.
• There are risks associated with the company's cash preservation plan and workforce reductions.
• Li-Cycle may not be able to attract and retain top talent.
• The company's debt obligations and strategic transactions pose potential risks.
• Operational disruptions, permit issues, and feedstock supply challenges could impact the company.
• Changes in market conditions, such as EV adoption rates and metal prices, could affect Li-Cycle's performance.
• The company faces risks related to intellectual property, cybersecurity, and litigation.

Future Outlook

The company expects to move forward with the appointment of Marcum as its new auditor and continue its strategic review of operations and capital projects. The company will also continue to work on its cash preservation plan and address its liquidity needs.

Management Comments

• Ajay Kochhar, President and CEO of Li-Cycle, stated that the Audit Committee is pleased to have selected Marcum as the Company's new independent auditor.
• Ajay Kochhar believes Marcum's expertise and understanding of the industry and business will serve the Company and its stakeholders well.

Industry Context

The appointment of a new auditor is a significant event for any public company, especially one in a rapidly evolving sector like lithium-ion battery recycling. This change comes as Li-Cycle navigates a challenging period of growth and strategic review, highlighting the importance of strong financial oversight and governance.

Comparison to Industry Standards

• The change of auditors is not uncommon, but it is important to note that KPMG is a large, well-known firm, and the change to Marcum, while a reputable firm, may raise questions from investors.
• Other companies in the battery recycling space, such as Redwood Materials and Ascend Elements, have also faced challenges in scaling their operations and securing funding, making Li-Cycle's situation not unique but still requiring careful monitoring.
• The delay in the shareholder meeting and the need to reconvene it is not ideal and may be viewed negatively by some investors, as it suggests potential issues with the company's internal processes.

Stakeholder Impact

• Shareholders will be impacted by the change in auditor and the reconvened meeting.
• The company's employees may be affected by the ongoing strategic review and cash preservation plan.
• Customers and suppliers may be impacted by the company's operational challenges and strategic decisions.
• Creditors may be concerned about the company's ability to service its debt.

Next Steps

• Shareholders will vote on the appointment of Marcum at the reconvened meeting on October 15, 2024.
• The company will file a supplemental proxy statement with the SEC.
• The company will distribute proxy materials to shareholders.

Key Dates

Keywords

Li-Cycle, Marcum, Auditor, Shareholder Meeting, Lithium-ion Battery Recycling, Accounting Firm, Corporate Governance, Proxy Vote, Financial Reporting, KPMG