8-K: Li-Cycle Holdings Corp. Announces At-the-Market Equity Offering of up to $75 Million

Li-Cycle Holdings Corp. has entered into an agreement to sell up to $75 million of its common shares through an at-the-market offering program.

Summary

• Li-Cycle Holdings Corp. has entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc.
• The company may offer and sell common shares with an aggregate offering price of up to $75 million.
• B. Riley will act as the company's sales agent or principal in this at-the-market equity offering program.
• B. Riley is not required to sell any specific number of shares but will use commercially reasonable efforts to sell shares on the company's behalf.
• The company will set the parameters for the sale of shares, including price, time, and size limits.
• Sales will be made through various methods, including directly on the New York Stock Exchange or in privately negotiated transactions.
• B. Riley will receive a commission of up to 3.0% of the gross proceeds from any shares sold.
• The company intends to use the net proceeds from the sales for general corporate purposes.
• The offering is made under the company's existing shelf registration statement filed with the SEC.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the offering provides financial flexibility, it also introduces potential dilution for existing shareholders. The terms are standard for this type of offering.

Positives

• The at-the-market offering provides Li-Cycle with a flexible way to raise capital.
• The company has the ability to control the timing and pricing of the share sales.
• The funds raised will be used for general corporate purposes, providing financial flexibility.
• The company has an existing shelf registration statement in place, allowing for a quick offering.

Negatives

• The offering could dilute existing shareholders' ownership.
• The company will incur commissions of up to 3.0% on the gross proceeds.
• There is no guarantee that all $75 million of shares will be sold.

Risks

• The company's share price could be negatively impacted by the new share issuance.
• Market conditions could affect the company's ability to sell shares at desired prices.
• The company's reliance on B. Riley to sell shares could pose a risk if B. Riley is unable to sell the shares.
• The company's use of proceeds for general corporate purposes may not be as transparent as a specific project.

Future Outlook

The company plans to use the net proceeds from any sales pursuant to the Sales Agreement for general corporate purposes.

Management Comments

• The company will set the parameters for the sale of shares, including any price, time or size limits or other customary parameters or conditions.

Industry Context

At-the-market offerings are a common method for companies to raise capital, especially when they want flexibility in timing and pricing. This approach allows Li-Cycle to tap the market as needed without a large, single offering.

Comparison to Industry Standards

• At-the-market offerings are frequently used by companies in the materials and recycling sectors to raise capital for growth and operations.
• The commission rate of up to 3.0% is within the typical range for at-the-market offerings.
• The size of the offering, $75 million, is moderate and appropriate for a company of Li-Cycle's size and stage of development.
• Other companies in the sector, such as Redwood Materials and Ascend Elements, have also used various forms of capital raising to fund their operations and expansion.

Stakeholder Impact

• Shareholders may experience dilution of their ownership due to the new share issuance.
• The company will have additional capital to fund its operations and growth.
• B. Riley Securities will benefit from the commissions earned on the share sales.

Next Steps

• Li-Cycle will file a prospectus supplement with the SEC related to the offer and sale of common shares.
• The company will begin selling shares through B. Riley based on the parameters set by the company.
• The company will use the net proceeds for general corporate purposes.

Key Dates

Keywords

at-the-market offering, equity offering, common shares, capital raise, B. Riley Securities, Li-Cycle Holdings Corp., share dilution, shelf registration