8-K: Li-Cycle Prices and Closes $15 Million Public Offering to Bolster Working Capital

Li-Cycle Holdings Corp. successfully priced and closed a $15 million underwritten public offering to enhance its working capital and for general corporate purposes.

Summary

• Li-Cycle Holdings Corp. has priced and closed an underwritten public offering, generating gross proceeds of approximately $15 million.
• The offering included units and pre-funded units, each consisting of common shares or pre-funded warrants, Series A warrants, and Series B warrants.
• The public offering price was $1.00 per unit and $0.99999 per pre-funded unit.
• Aegis Capital Corp. acted as the sole book-running manager.
• Li-Cycle intends to use the net proceeds for working capital and general corporate purposes.
• Aegis Capital Corp. exercised its over-allotment option with respect to 2,250,000 Series A Warrants and 2,250,000 Series B Warrants.
• Glencore Canada Corporation consented to the issuance of the warrants and waived any related defaults under the senior secured convertible note.
• Li-Cycle will amend the Glencore Notes to reflect any more favorable terms contained in the Warrants, if requested by Glencore, within ten business days of the offering's closing.

Sentiment

Score: 5

Explanation: The announcement is neutral. While the company successfully raised capital, the need for the offering suggests underlying financial challenges. The Glencore waiver is a positive, but the overall picture is mixed.

Positives

• The offering provides Li-Cycle with $15 million in gross proceeds to bolster working capital.
• Glencore's consent and waiver remove potential roadblocks related to the senior secured convertible note.
• The company will amend the Glencore Notes to reflect any more favorable terms contained in the Warrants, if requested by Glencore, within ten business days of the offering's closing.

Negatives

• The offering involves the issuance of warrants, which could dilute existing shareholders if exercised.
• The company is in serious financial difficulty, that the Transactions are designed to improve Li-Cycles financial position, and that the terms of the Transactions are reasonable in the circumstances of Li-Cycle.

Risks

• The company is in serious financial difficulty, that the Transactions are designed to improve Li-Cycles financial position, and that the terms of the Transactions are reasonable in the circumstances of Li-Cycle.
• The company is relying on the financial hardship exemptions in Sections 5.5(g) and 5.7(e) of MI 61-101.

Future Outlook

Li-Cycle intends to use the net proceeds from this Offering for working capital and general corporate purposes.

Industry Context

This announcement reflects Li-Cycle's ongoing efforts to secure funding and strengthen its financial position in the competitive lithium-ion battery recycling industry. The offering provides additional capital to support the company's operations and strategic initiatives.

Comparison to Industry Standards

• It's difficult to directly compare this offering to industry standards without knowing the specific terms of comparable offerings by other lithium-ion battery recycling companies.
• However, similar offerings by companies in the resource recovery or cleantech sectors often involve a combination of common stock and warrants to attract investors.
• The use of pre-funded warrants is also a common strategy for companies seeking to raise capital while managing potential dilution.

Related Party Transactions

• The company entered into a consent and waiver agreement with Glencore Canada Corporation, a related party, in connection with the offering.
• The independent members of the Board of Directors of Li-Cycle determined that the Transactions will be exempt from the formal valuation and minority approval requirements of MI 61-101 on the basis of the financial hardship exemptions in Sections 5.5(g) and 5.7(e) of MI 61-101.

Stakeholder Impact

• Shareholders may experience dilution due to the issuance of new shares and warrants.
• The offering provides Li-Cycle with additional capital to support its operations, which could benefit employees and other stakeholders.
• The Glencore waiver removes a potential risk related to the senior secured convertible note.

Next Steps

• Li-Cycle will use the net proceeds for working capital and general corporate purposes.
• The company will amend the Glencore Notes to reflect any more favorable terms contained in the Warrants, if requested by Glencore, within ten business days of the offering's closing.

Key Dates