Li-Cycle Holdings Corp, a Toronto-based lithium-ion battery resource recycling company, has received a $100 million convertible note financing. The investor is Koch Strategic Platforms, an affiliate of Koch Investments Group. Li-Cycle, which went public earlier this year through a merger with Carnelian Energy Capital’s Peridot Acquisition Corp, will use the proceeds of the deal to fund growth opportunities.
TORONTO — Li-Cycle Holdings Corp. (NYSE: LICY) (“Li-Cycle” or “the Company”), an industry leader in lithium-ion battery resource recovery and the leading lithium-ion battery recycler in North America, today announced that Koch Strategic Platforms (“KSP”), a subsidiary of Koch Investments Group, will make a $100 million investment in Li-Cycle through purchase of a convertible note to support the Company’s rapidly expanding growth opportunities in North America, Europe and Asia.
In addition to the new capital, the Company along with several Koch Industries subsidiaries are exploring opportunities to accelerate Li-Cycle’s global growth strategies. This includes potentially working with Koch Engineered Solutions (“KES”) which provides engineering, procurement, and construction services, as well as the Optimized Process Designs group (“OPD”), a capability of KES, which provides detailed engineering packages, single point procurement for all equipment and materials, fabrication, and construction services. Li-Cycle and KES are exploring commercial opportunities to support the global deployment of incremental Spoke facilities and to enhance execution and operational readiness for the Company’s Rochester Hub1.
“KSP’s investment in Li-Cycle will further fund and accelerate the growth of our lithium-ion battery recycling footprint in North America and globally, as we scale our efficient and proven technology globally to grow in lockstep with our customers and pursue new market opportunities,” said Ajay Kochhar, co-founder and Chief Executive Officer of Li-Cycle.
“Lithium-ion battery recycling and recovery is critical for the electrification of transportation. Li-Cycle is a true leader in the space with proven innovative technology and a robust portfolio of customers and strategic partners,” said David Park, president of Koch Strategic Platforms. “We’re confident in Li-Cycle’s cutting-edge technology and in the Company’s ability to deliver long-term value to its stakeholders throughout the battery supply chain.”
With the pace of deployment of new battery mega-factories far exceeding initial expectations, Li-Cycle recognizes the need to accelerate the Company’s roll-out of Spoke & Hub capacity to capture the growing market opportunity. Li-Cycle’s total addressable market (“TAM”) estimate for the quantity of lithium-ion batteries available for recycling globally in 2025 has accelerated significantly in just the past five months. Estimates of the TAM in 2025 in North America, Europe and China have all increased by at least 50%, based on sources that include Benchmark Mineral Intelligence, as well as Li-Cycle market intelligence and forecasting. Among the key drivers of this growth are new battery mega-factory announcements exceeding original expectations. This drives additional battery manufacturing scrap available for recycling, in lockstep with battery manufacturing. The incremental capital being raised from KSP will be directed towards the accelerated expansion of Li-Cycle’s battery recycling footprint, both in North America and internationally.
Terms of the Transaction
Under the terms of the investment, KSP will purchase a convertible note in the aggregate principal amount of $100 million (the “Note”). The Note will have an initial conversion price of approximately $13.43 per Li-Cycle common share (the “Common Shares”), subject to customary anti-dilution adjustments, which price was established based on 125% of the 7-day volume-weighted average price of Li-Cycle’s common shares prior to the date of the Note Purchase Agreement. Li-Cycle will settle its conversion obligations through the delivery of shares of Common Shares. The Note will mature on September 29, 2026 unless earlier repurchased, redeemed or converted. Interest on the Note will be payable semi-annually, and Li-Cycle is permitted to pay interest on the Note in cash or payment in-kind (“PIK”), at its election. Interest payments made in cash will be based on an interest rate of LIBOR plus 5.0% per year, and PIK interest payments will be based on an interest rate of LIBOR plus 6.0% per year. Under the terms of the investment, LIBOR has a floor of 1.0% and a cap of 2.0%. In addition, KSP has committed to a standstill agreement and Li-Cycle has granted certain registration rights to KSP.
Additional information regarding this announcement may be found in a Form 6-K that will be filed with the U.S. Securities and Exchange Commission.
Opportunity to Leverage Proven Expertise from Select Koch Businesses
The Company expects this strategic investment by KSP to provide Li-Cycle with the opportunity to tap into key industry expertise across the broader Koch Industries ecosystem in order to augment Li-Cycle’s existing expertise, on mutually acceptable terms and with aligned incentives for the long-term success of Li-Cycle. Opportunities for Li-Cycle to collaborate with KES include, but are not limited to, the following work streams2:
KES has capabilities to construct, test and ship modular Spoke facilities at various KES construction facilities, including in Texas and Poland
KES, with offices in 54 countries, can support Li-Cycle with the roll-out and ground execution of Spoke facilities globally
Hub Operational Readiness
KES can support Li-Cycle with the development of a tailored operational readiness plan for the Rochester Hub
Citi and Cowen are acting as financial advisors to Li-Cycle, and Freshfields Bruckhaus Deringer US LLP and McCarthy Tétrault LLP are serving as Li-Cycle’s legal advisors in the transaction.
Stinson LLP is serving as legal advisor to KSP.
This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful. The Note and any Common Shares issuable upon conversion of the Note have not been registered under the U.S. Securities Act of 1933, as amended, or any state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements.
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is on a mission to leverage its innovative Spoke & Hub Technologies™ to provide a customer-centric, end-of-life solution for lithium-ion batteries, while creating a secondary supply of critical battery materials. Lithium-ion rechargeable batteries are increasingly powering our world in automotive, energy storage, consumer electronics, and other industrial and household applications. The world needs improved technology and supply chain innovations to better manage battery manufacturing waste and end-of-life batteries and to meet the rapidly growing demand for critical and scarce battery-grade raw materials through a closed-loop solution. For more information, visit https://li-cycle.com/.