Li-Cycle, a lithium-ion battery recycling company, entered into an agreement to issue a senior secured convertible note in an aggregate principal amount of $75 million from an affiliate of Glencore, a producer, recycler, and marketer of nickel and cobalt for the production of lithium-ion batteries.
The funding comes at a critical time for the company. Li-Cycle announced a pause last year on its Rochester Hub project, a commercial hydrometallurgical battery resource recovery facility in North America. The decision to halt the project was attributed to soaring construction costs.
The funding secured from Glencore’s affiliate is expected to strengthen the company’s position and bolster its strategic partnership with Glencore. Moreover, the funding is expected to support Li-Cycle’s future plans.
Under the terms of the senior convertible note, which matures on the fifth anniversary of closing, investors have the option to convert their investment into common shares of Li-Cycle. The initial conversion price is set at $0.53 per Li-Cycle common share, reflecting the confidence of investors in the company’s long-term prospects. Cash interest payments will be based on the Secured Overnight Financing Rate (“SOFR”) plus 5.0% per year, and PIK payments will be based on SOFR plus 6.0% per year.
Glencore had previously entered into a deal with Li-Cycle in 2022 to supply manufacturing scrap and end-of-life lithium-ion batteries. As part of the deal, Glencore also invested $200 million in Toronto-based Li-Cycle.
Tim Johnston, Li-Cycle co-founder and Executive Chairman commented: “As part of our previously announced comprehensive review, Li-Cycle is continuing to review our global recycling network. We are also reviewing our go-forward strategy for the paused Rochester Hub, including analyzing potential end-product mix options and construction strategy. We believe the demand for critical battery materials continues to accelerate, and Li-Cycle continues to work to position itself as a future leader in the production of critical battery materials through our sustainable, safe, and patented recycling technology.”
According to Mercom’s Annual and Q4 2023 Funding and M&A Report for Storage & Smart Grid, corporate funding in the Energy Storage sector, including VC/PE funding, decreased 28% YoY, with $19 billion raised in 120 deals compared to $26.4 billion raised in 124 deals in 2022.
