Glencore has invested $75 million in Li-Cycle. This is the second investment that Glencore has made in Li-Cycle. The first was secured in June 2022.
"Glencore is committed to bringing scalable and sustainable circularity into the supply chain of battery materials," said Kunal Sinha, global head of recycling for Glencore, and non-executive director of Li-Cycle's Board of Directors. "Our original investment in Li-Cycle, alongside key commercial agreements, formed part of this strategy. Today, we are pleased to further support Li-Cycle through this additional $75 million investment so both Li-Cycle and Glencore can continue to build the battery circularity platform of choice for our customers."
Glencore has designated Li-Cycle as one of its preferred recycling partners, and Li-Cycle and Glencore entered into a strategic commercial partnership aimed at creating an integrated platform to supply a global base with both primary and recycled critical battery materials. As part of the partnership, Glencore previously made a $200 million investment in Li-Cycle in June 2022 by purchasing a convertible note.
Glencore is a battery feedstock partner for Li-Cycle's Spoke facilities, as well as a future supplier of both black mass and key reagents for Li-Cycle's future hub facilities. As part of the investment, Glencore will purchase a $75 million senior secured convertible note from Li-Cycle. The note will mature five years after closing into common shares of Li-Cycle. Li-Cycle will be entitled to pay interest on the note.
The note is redeemable at the option of Li-Cycle at a redemption price equal to 100 percent of the then outstanding principal amount of the note being redeemed plus accrued and unpaid interest. After the financial statements for the 2026 fiscal year, Li-Cycle will redeem a portion of the outstanding amount equal to a specified percentage of the excess cash flow generated by Li-Cycle and its subsidiaries. On each redemption date, whether due to an optional or mandatory redemption, Li-Cycle will be required to issue to Glencore several warrants entitling Glencore to acquire common shares of Li-Cycle equal to the amount of the note being redeemed divided by the conversion price.
As security for Li-Cycle's obligations under the note, Li-Cycle has agreed to give Glencore a security interest in substantially all of its assets. Li-Cycle's subsidiaries organized in Canada, the United States, Switzerland, and Germany have agreed to guarantee the obligations and provide security interests on substantially all of their assets (in the case of the U.S. and Canadian subsidiaries) and certain specified assets (in the case of the German and Swiss subsidiaries).
In addition, Li-Cycle and Glencore have also restated the terms of the existing note, in two tranches, each of which will include new terms that come into effect upon the occurrence of future events. The first A&R note will include modifications to the terms of the existing note that take effect on the date that is the earliest to occur of (a) the date that is one month after the effectiveness and initial funding of a project loan financing for the Rochester Hub, and (b) December 31, 2024. The second A&R note will include modifications to the terms of the existing note that take effect on the date that is the earliest to occur of (a) the first commercial production from the Rochester Hub, (b) construction costs exceeding the construction budget outlined in the project loan financing, and (c) June 1, 2026.
The issuance and sale of the Note to Glencore is subject to customary closing conditions and the expiration of the ten days for the required notice to shareholders informing them of the Li-Cycle's reliance on the New York Stock Exchange and is expected to close on or about March 25, 2024.
