8-K: Li-Cycle to Trade on OTCQX After NYSE Delisting; Secures Waiver on Market Cap Requirements

Li-Cycle's common shares are set to trade on the OTCQX market following delisting from the NYSE due to non-compliance with listing standards, while securing waivers from convertible debt holders regarding market capitalization requirements.

Summary

• Li-Cycle Holdings Corp. announced its common shares will begin trading on the OTCQX Best Market under the symbol LICYF on February 27, 2025, following suspension of trading on the NYSE.
• The NYSE delisted Li-Cycle's common shares because the average closing price was less than $1.00 over a consecutive 30-day trading period, and the company had effected a reverse stock split within the prior year.
• Li-Cycle has decided not to appeal the NYSE's delisting determination.
• The company has been approved to trade its common shares on the OTCQX and expects trading to commence on February 27, 2025.
• Li-Cycle is also seeking a listing on another eligible market by April 30, 2025.
• Li-Cycle obtained waivers from Glencore Canada Corporation and Wood River Capital, LLC, its convertible debt holders, to allow the move to OTCQX as an eligible market until April 30, 2025.
• These waivers temporarily waive the minimum market capitalization requirements for the OTC US Market to be considered an Eligible Market under the terms of their convertible notes.
• The waivers are subject to certain termination events, including defaults under the Glencore or Koch Notes, the KSP Waiver ceasing to be in effect, or the DOE loan agreement ceasing to be in effect.

Sentiment

Score: 4

Explanation: The sentiment is slightly negative due to the delisting from the NYSE, which is a significant setback. While the company is taking steps to mitigate the impact by moving to OTCQX and securing waivers, the overall situation reflects financial challenges and uncertainty.

Positives

• Li-Cycle has secured waivers from its convertible debt holders, Glencore and Wood River, allowing it to trade on the OTCQX market.
• The company expects the move to OTCQX to reduce costs while maintaining access to U.S. capital markets.
• Li-Cycle is actively seeking a listing on another eligible market by April 30, 2025.
• The company has a finalized DOE loan facility and partnerships across the global critical minerals and lithium-ion battery supply chains.

Negatives

• Li-Cycle's common shares were delisted from the NYSE due to non-compliance with listing standards.
• The company's share price has been below $1.00 for a sustained period, triggering the delisting.
• The waivers from Glencore and Wood River are temporary and expire on April 30, 2025, unless certain termination events occur.
• The company is reliant on waivers to trade on the OTCQX market.

Risks

• The waivers from Glencore and Wood River are subject to termination events, including defaults under the convertible notes or termination of the DOE loan agreement.
• Failure to secure a listing on another eligible market by April 30, 2025, could impact the terms of the convertible debt.
• Trading on the OTCQX may result in a less liquid market for the company's common shares.
• The company's ability to raise capital, attract employees, or acquire other companies could be impaired if an active market for its common shares is not sustained.

Future Outlook

Li-Cycle expects its common shares to start trading on the OTCQX under the symbol LICYF on February 27, 2025, and plans to list its common shares on another eligible market in accordance with the terms of its convertible debt.

Management Comments

• Ajay Kochhar, Li-Cycle President and CEO, stated that moving to OTCQX is expected to reduce costs while continuing to provide efficient access to U.S. capital markets.
• Ajay Kochhar emphasized the company's focus on securing a complete funding package for the Rochester Hub project and satisfying funding conditions for the DOE loan facility.

Industry Context

The delisting from the NYSE and subsequent move to OTCQX reflects challenges faced by some companies in maintaining listing compliance amid market volatility and financial pressures. Securing waivers from debt holders is a strategic move to ensure continued access to capital markets while navigating these challenges.

Comparison to Industry Standards

• Many companies facing delisting from major exchanges explore options like OTC markets to maintain trading liquidity, though this often comes with reduced visibility and potentially lower trading volumes.
• Obtaining waivers from debt holders is a common practice for companies in financial distress, allowing them to maintain operational flexibility while addressing listing compliance issues.
• Comparable companies in the resource recovery and recycling sector, such as Redwood Materials and Ascend Elements, are privately held and not subject to the same listing requirements, making direct comparisons challenging.

Stakeholder Impact

• Shareholders may experience reduced liquidity and potentially lower trading prices due to the move to OTCQX.
• Employees may face uncertainty regarding the company's financial stability and future prospects.
• Customers and suppliers may be concerned about the company's ability to fulfill its obligations.
• Creditors may be monitoring the company's financial performance and compliance with debt covenants.

Next Steps

• Commence trading on the OTCQX under the symbol LICYF on February 27, 2025.
• Seek a listing of the common shares on another eligible market by April 30, 2025.
• Secure a complete funding package for the Rochester Hub project.
• Satisfy funding conditions for the first advance under the U.S. Department of Energy (DOE) loan facility.

Key Dates

Keywords

Li-Cycle, OTCQX, NYSE, Delisting, Glencore, Wood River, Waiver, Convertible Debt, Market Capitalization, Eligible Market