DEF 14A: Li-Cycle Holdings Corp. Announces Annual General and Special Meeting, Proposes Share Consolidation

Li-Cycle Holdings Corp. will hold its annual general and special meeting on May 23, 2024, to vote on key proposals including the election of directors, appointment of auditors, and a share consolidation.

Summary

• Li-Cycle Holdings Corp. is holding its annual general and special meeting of shareholders on May 23, 2024.
• Shareholders will vote on several proposals, including electing nine directors, appointing an independent auditor, and approving a share consolidation.
• The proposed share consolidation would allow the Board to consolidate outstanding shares within a ratio of 2:1 to 8:1.
• The Board recommends voting FOR all proposals, including the share consolidation, which aims to maintain NYSE compliance and attract a broader investor base.
• The company is seeking approval to adjourn the meeting if necessary to complete the search for a successor auditor after KPMG LLP declined to stand for re-appointment.
• The Board has adopted a target of 30% gender-diverse membership on the Board, demonstrating its commitment to diversity, equity and inclusion.
• The nominees to the Board include three gender-diverse members (33%) and three racially-diverse members (33%).
• The company has retained Innisfree M&A Incorporated as its proxy solicitation agent for assistance in connection with the solicitation of proxies for the Meeting, and will pay Innisfree fees of approximately $35,000 for such services including anticipated certain out-of-pocket expenses.

Sentiment

Score: 4

Explanation: The document presents a mixed sentiment. While it outlines necessary corporate actions like the share consolidation and auditor change, it also acknowledges financial challenges and the need for strategic reviews, resulting in a cautiously optimistic outlook.

Positives

• The proposed share consolidation aims to increase the market price of the shares to maintain compliance with NYSE minimum share price requirements.
• The share consolidation could potentially improve the marketability and liquidity of the shares.
• A higher stock price may attract a broader range of institutional and other investors.
• The Board has adopted a target of 30% gender-diverse membership on the Board, demonstrating its commitment to diversity, equity and inclusion.
• The nominees to the Board include three gender-diverse members (33%) and three racially-diverse members (33%).

Negatives

• KPMG LLP declined to stand for re-appointment as the company's independent auditor.
• The company is seeking approval to adjourn the meeting if necessary to complete the search for a successor auditor.
• The company has suffered recurring losses from operations since inception, continued cash outflows from operating activities and paused its construction of the Rochester Hub project, that raise substantial doubt about its ability to continue as a going concern.

Risks

• There is no guarantee that the share consolidation will increase the market price of the shares or maintain NYSE listing compliance.
• The market price per share after the share consolidation may not rise in proportion to the reduction in the number of shares outstanding.
• The liquidity of the shares could be adversely affected by the reduced number of shares outstanding after the share consolidation.
• The company has suffered recurring losses from operations since inception, continued cash outflows from operating activities and paused its construction of the Rochester Hub project, that raise substantial doubt about its ability to continue as a going concern.

Future Outlook

The company is focused on maintaining NYSE compliance, attracting a broader investor base, and exploring strategic alternatives to increase liquidity.

Industry Context

The announcement reflects the company's efforts to navigate financial challenges and maintain its listing on the NYSE, a common concern for growth companies in the cleantech and battery recycling sectors.

Comparison to Industry Standards

• The proposed share consolidation is a common strategy employed by companies facing delisting from major exchanges, similar to actions taken by other companies in the EV and cleantech space such as Fisker Inc. and Lordstown Motors Corp.
• The company's focus on corporate governance and board diversity aligns with increasing investor expectations and regulatory requirements, comparable to initiatives seen at companies like Tesla and Redwood Materials.
• The company's engagement with Glencore is similar to other strategic partnerships in the battery materials industry, such as Ganfeng Lithium's collaboration with International Lithium Corp.

Management Changes

Related Party Transactions

• The company has engaged Fade In Production Pty. Ltd., which is controlled by certain members of the immediate family of Tim Johnston, the Company's interim non-executive Chair, to provide it with corporate video production services since 2017.
• The company purchased feed in the aggregate amount of $9.2 million and paid sourcing fees to Glencore in the aggregate amount of $0.1 million under the Amended & Restated Global Feed Sourcing Agreement.
• The company sold materials to Glencore in the aggregate amount of $3.6 million and paid supplemental marketing fees in the amount of $0.2 million under the Black Mass Off-Take Agreement.
• The company sold materials to Glencore in the aggregate amount of $1.4 million under the By-Products Off-Take Agreement.
• The company issued a senior secured convertible note in an aggregate principal amount of $75.0 million to an affiliate of Glencore plc.

Stakeholder Impact

• Shareholders: The share consolidation and other proposals directly impact shareholder value and voting rights.
• Employees: Organizational structure changes and workforce reductions affect employee morale and job security.
• Customers and Suppliers: Commercial agreements with Glencore and Traxys influence the supply chain and market access.
• Creditors: The issuance of convertible notes and related covenants impact the company's financial obligations and flexibility.

Next Steps

• Shareholders to vote on proposals at the May 23, 2024 meeting.
• Board to determine whether to implement the share consolidation and at what ratio.
• Audit Committee to complete the search for a successor auditor.
• Company to continue exploring strategic alternatives and financing options.

Key Dates

Keywords

share consolidation, annual meeting, proxy statement, directors, auditor, Li-Cycle, NYSE