XML 72 R22.htm IDEA: XBRL DOCUMENT v3.24.0.1
Loan payable
 12 Months Ended
Dec. 31, 2023
Debt Disclosure [Abstract]  
Loan payable Loan payable
BDC LoanPromissory Notes and OtherTotal
Balance as at November 1, 2020$2.2 $0.1 $2.3 
Proceeds from loans payable
3.1 7.0 10.1 
Repayment of loans payable
(5.5)(7.0)(12.5)
Foreign exchange loss0.2 (0.1)0.1 
Balance as at October 31, 2021
$— $— $— 

(i)    BDC Capital Loan
On December 16, 2019, the Company entered into a binding agreement with BDC Capital Inc. for a secured loan of $5.3 million (C$7.0 million) to help finance the expansion plans of the Company (the “BDC Capital Loan”), which was to be distributed in up to three tranches, with the second and third tranches to be distributed based on the achievement of certain milestones by the Company. Pursuant to the BDC Capital Loan, each of Li-Cycle Corp. and Li-Cycle Inc. entered into general security agreements with BDC Capital Inc. granting the lender a general security interest over all assets of Li-Cycle Corp. and Li-Cycle Inc., respectively. In addition, Li-Cycle Inc. guaranteed the Company’s obligations under BDC Capital Loan under a guarantee agreement. The maturity date of the BDC Capital Loan was December 14, 2023. The base rate of interest was 16% per annum, paid monthly, plus additional accrued interest of 3% that could be reduced to 0% based on the achievement of certain milestones by the Company. Principal payments began on the first anniversary date of the loan and were made at $0.1 million (C$0.2 million) per month with a balloon payment of $0.5 million (C$0.7 million) at maturity.
On February 10, 2020, the Company received the first tranche of the BDC Capital Loan for $2.3 million (C$3.0 million). Transaction costs associated with the loan amounted to $0.1 million (C$0.1 million) and were deducted from the loan balance.
On November 2, 2020, the Company received the second tranche of the BDC Capital Loan for $1.5 million (C$2.0 million) upon the completion of the milestone for such additional funding.
On April 7, 2021, the Company received the third tranche of the BDC Capital Loan for $1.6 million (C$2.0 million) upon the completion of the milestone for such additional funding.
On July 20, 2021, Li-Cycle signed an agreement with BDC Capital Inc to repay the BDC Capital Loan in full, conditional upon the closing of Li-Cycle’s business combination with Peridot Acquisition Corp. on August 10, 2021.
On August 11, 2021, in accordance with the agreement to repay the BDC Capital Loan in full upon the closing of Li-Cycle’s business combination with Peridot Acquisition Corp., Li-Cycle paid BDC Capital Inc. $5.3 million (C$6.6 million) to settle the BDC Capital Loan, including additional interest expense of $0.7 million (C$0.9 million).

(ii) Promissory Notes
On June 16, 2021, Li-Cycle issued promissory notes (the “Promissory Notes”) for an aggregate principal amount of $7.0 million as consideration for loans received from companies related to the Chief Executive Officer and the Executive Chair of Li-Cycle, respectively. The Promissory Notes bore interest at the rate of 10% per annum and had a maturity date of December 15, 2023. The Promissory Notes were unsecured and subordinate to indebtedness owing to Li-Cycle’s senior lender, BDC Capital Inc. Li-Cycle had the option of prepaying all or any portion of the principal and accrued interest of the Promissory Notes prior to the maturity date without penalty, subject to certain conditions. On August 17, 2021, Li-Cycle elected to repay the full balance of the promissory notes for a total of $7.1 million, including accrued interest.
Convertible debt
As atDecember 31,
2023		December 31, 2022October 31, 2022October 31, 2021
KSP Convertible Notes (a)$99.1 $91.4 $92.4 $100.9 
Glencore Convertible Notes (b)189.0 181.4 196.1 — 
Total Convertible Debt at end of the period$288.1 $272.8 $288.5 $100.9 
The KSP Convertible Notes and the Glencore Convertible Notes are both unsecured debt instruments. Amount of maturities and sinking fund requirements for convertible debt instruments, with interest components rolled into principal, for each of the next five years are as follows:
2024$— 
2025— 
2026148.6 
2027297.7 
2028— 
Thereafter— 
Total
$446.3 
(a)KSP Convertible Notes
As atDecember 31, 2023December 31, 2022October 31, 2022October 31, 2021
Principal of convertible note at beginning of period
$110.2 $105.9 $100.0 $100.0 
Issuance of convertible notes9.1 4.3 5.9 — 
Principal of convertible notes at end of the period$119.3 $110.2 $105.9 $100.0 
Conversion feature at beginning of period$6.0 $9.1 $29.0 $— 
Conversion feature issued— — — 27.7 
Fair value (gain) loss on embedded derivative(6.0)(3.1)(19.9)1.3 
Conversion feature at end of period$— $6.0 $9.1 $29.0 
Debt component at beginning of the period$85.4 $83.3 $71.9 $— 
Debt component issued9.1 4.3 5.9 72.3 
Transaction costs
— — — (1.6)
Accrued interest paid in kind(9.1)(4.3)(5.9)— 
Accrued interest expense13.7 2.1 11.4 1.2 
Debt component at end of period$99.1 $85.4 $83.3 $71.9 
Total convertible debt at end of period$99.1 $91.4 $92.4 $100.9 
On September 29, 2021, the Company entered into a Note Purchase Agreement (the “KSP Note Purchase Agreement”) with Spring Creek Capital, LLC (an affiliate of Koch Strategic Platforms, LLC, being a subsidiary of Koch Investments Group) and issued an unsecured convertible note (the “Initial KSP Note”) for a principal amount of $100 million to Spring Creek Capital, LLC. The Initial KSP Note will mature on September 29, 2026, unless earlier repurchased, redeemed or converted. Interest on the Initial KSP Note is payable semi-annually, and Li-Cycle is permitted to pay interest on the Initial KSP Note in cash or by payment in-kind (“PIK”), at its election. Interest payments made in cash were based on an interest rate of LIBOR plus 5.0% per year, and PIK interest payments were based on an interest rate of LIBOR plus 6.0% per year, with a LIBOR floor of 1% and a cap of 2%. Since July 1, 2023, as the LIBOR interest rate is no longer published, under the terms of the KSP Note Purchase Agreement, the interest rate is instead based on the sum of the Secured Overnight Financing Rate (“SOFR”) and the average spread between the SOFR and LIBOR during the three-month period ending on the date on which LIBOR ceases to be published. Accordingly, the effective interest rate of the KSP Note is now 14.9%.
The PIK election results in the issuance of a new note under the same terms as the Initial KSP Note, issued in lieu of interest payments with an issuance date on the applicable interest date. On May 1, 2022, Spring Creek Capital, LLC assigned the Initial KSP Note and the PIK note outstanding at that time to an affiliate, Wood River Capital, LLC. The Company has elected to pay interest on the Initial KSP Note by PIK since the first interest payment date of December 31, 2021. The Initial KSP Note and the PIK notes issued thereunder are referred to collectively as the “KSP Convertible Notes”, and as at December 31, 2023, comprised the following:
NoteDate IssuedAmount Issued
Initial KSP NoteSeptember 29, 2021$100.0 
PIK NoteDecember 31, 20211.8 
PIK NoteJune 30, 20224.1 
PIK NoteDecember 31, 20224.3 
PIK NoteJune 30, 20234.4 
PIK NoteDecember 31, 20234.7 
Total$119.3 
At the option of the holder, the KSP Convertible Notes may be converted into common shares of the Company at a conversion price of $13.43, subject to customary anti-dilutive adjustments. If the Company's share price is equal to or greater than $17.46, for a period of twenty consecutive days, the Company can force conversion of the KSP Convertible Notes at an amount equal to the sum of principal, accrued but unpaid interest, plus any make-whole amount which equal to the undiscounted interest that would have been payable from the date of conversion to the maturity date. At the Company's option at any time, the Company can also redeem all of the KSP Convertible Notes at any time for a cash purchase price equal to 130% of the principal plus unpaid interest until maturity. The conversion feature under the KSP Convertible Notes has been recorded as a bifurcated embedded derivative liability since the conversion ratio does not always result in a conversion of a fixed dollar amount of liability for a fixed number of shares due to the optionality of the interest rate utilized on conversion at the Company's option. The KSP Convertible Notes are also subject to redemption upon a change of control event or an event of default. Under an event of default, redemption happens upon occurrence of an event at the holder’s discretion. Under a change of control event, mandatory redemption happens upon occurrence of an event. Both the change of control and event of default options under the KSP Convertible Notes have been recorded as bifurcated embedded derivative liabilities as the redemption price triggered by these features represents a substantial premium over the principal amount. The bifurcated embedded derivatives are measured at fair value bundled together as a single compound embedded derivative. As at December 31, 2023, no conversions or redemptions had taken place.
The fair value of the compound embedded derivative upon issuance of the KSP Convertible Notes was determined to be a liability of $27.7 million whereas the remaining $72.3 million, net of transaction costs of $1.6 million, was allocated to the principal portion of the debt. During the year ended December 31, 2023, the Company recognized a fair value gain of $6.0 million on the embedded derivatives (for the two months ended December 31, 2022: gain of $3.1 million; for the year ended October 31, 2022: gain of $19.9 million; for the year ended October 31, 2021: loss of $1.3 million). The embedded derivatives were valued using the Binomial Option Pricing Model. The assumptions used in the model were as follows:
(Issuance date)
September 29, 2021		October 31, 2021October 31, 2022December 31, 2022December 31, 2023
Risk free interest rate1.1%1.2%4.4%4.2%4.1%
Expected life of options5.0 years4.9 years3.9 years3.8 years2.7 years
Expected dividend yield0.0%0.0%0.0%0.0%0.0%
Expected stock price volatility66%62%63%63%65%
Share Price$12.56$12.94$5.96$4.76$0.58
Expected volatility was determined by calculating the average implied volatility of a group of listed entities that are considered similar in nature to the Company.
(b)Glencore Convertible Notes
As atDecember 31, 2023December 31, 2022October 31, 2022October 31, 2021
Principal of convertible note at beginning of period$208.1 $200.0 $— $— 
Issuance of convertible notes17.2 8.1 200.0 — 
Principal of convertible note at end of period$225.3 $208.1 $200.0 $— 
Conversion feature at beginning of period$16.5 $34.8 $— $— 
Conversion feature issued— — 46.2 — 
Fair value (gain) loss on embedded derivative(16.1)(18.3)(11.4)— 
Conversion feature at end of period$0.4 $16.5 $34.8 $— 
Debt component at beginning of period$164.9 $161.3 $— $— 
Debt component issued17.2 8.1 153.8 — 
Transaction costs— — (1.3)— 
Accrued interest paid in kind(17.2)(8.1)— — 
Accrued interest expense23.7 3.6 8.8 — 
Debt component at end of period$188.6 $164.9 $161.3 $— 
Total Convertible Debt at end of period$189.0 $181.4 $196.1 $— 
On May 31, 2022, the Company issued an unsecured convertible note (the “Glencore Note”) for a principal amount of $200 million to Glencore Ltd. (“Glencore”), a subsidiary of Glencore plc (LON: GLEN). The Glencore Note will mature on May 31, 2027 unless there is an earlier repurchase, redemption or conversion. Interest on the Glencore Note is payable semi-annually, with Li-Cycle permitted to pay interest on the Glencore Note in cash or by payment in-kind (“PIK”), at its election. Interest payments made in cash are based on an interest rate of the SOFR for a tenor comparable to the relevant interest payment period plus 0.42826% (the “Floating Rate”) plus 5% per annum if interest is paid in cash and plus 6% per annum if interest is paid in PIK. The Floating Rate has a floor of 1% and a cap of 2%. The PIK election results in the issuance of a new note under the same terms as the initial Glencore Note, issued in lieu of interest payments with an issuance date on the applicable interest date. The effective interest rate of the Glencore Note is 13.5%.
The Company has elected to pay interest by PIK since the first interest payment on November 30, 2022. The Glencore Note and the PIK notes issued thereunder are referred to collectively as the “Glencore Convertible Notes”, and as at December 31, 2023, comprised the following:
NoteDate IssuedAmount Issued
Glencore NoteMay 31, 2022$200.0 
PIK NoteNovember 30, 20228.1 
PIK NoteMay 31, 20238.4 
PIK NoteNovember 30, 20238.8 
Total$225.3 
At the option of the holder, the Glencore Convertible Notes may be converted into common shares of the Company at a conversion price of $9.95, subject to customary anti-dilutive adjustments. The conversion feature under the Glencore Convertible Notes has been recorded as an embedded derivative liability as the conversion ratio does not always result in a conversion of a
fixed dollar amount of liability for a fixed number of shares due to the optionality of the interest rate utilized on conversion at the Company's option. The Glencore Convertible Notes are also subject to redemption upon a change of control event or an event of default. Under an event of default, redemption happens upon occurrence of an event at the holder’s discretion. Under a change of control event, mandatory redemption happens upon occurrence of an event. The change of control, event of default, and optional redemption options under the Glencore Convertible Notes have been recorded as bifurcated embedded derivative liabilities. The bifurcated embedded derivatives are measured at fair value bundled together as a single compound embedded derivative. As at December 31, 2023, no conversion or redemption had taken place.
In connection with any optional redemption and provided that Glencore has not elected to convert the Glencore Note into common shares, the Company must issue warrants (the “Glencore Warrants”) to Glencore on the optional redemption date that entitle the holder to acquire, until the maturity date of the Glencore Note, a number of common shares equal to the principal amount of the Glencore Note being redeemed divided by the then applicable conversion price. The initial exercise price of the Glencore Warrants will be equal to the conversion price as of the optional redemption date.
The fair value of the embedded derivative liability upon issuance of the Glencore Convertible Notes was determined to be $46.2 million with the remaining $153.8 million, net of transaction costs of $1.3 million, allocated to the initial amortized cost of the host debt instrument. During the year ended December 31, 2023, the Company recognized a fair value gain of $16.1 million on the embedded derivatives (for the two months ended December 31, 2022: $18.3 million; for the year ended October 31, 2022: $11.4 million). The embedded derivatives were valued using the Finite Difference Method. The assumptions used in the model were as follows:
(Issuance date)
May 31, 2022		October 31, 2022December 31, 2022December 31, 2023
Risk free interest rate2.9%4.4%4.2%3.8%
Expected life of options5.0 years4.6 years4.4 years3.4 years
Expected dividend yield0.0%0.0%0.0%0.0%
Expected stock price volatility68%63%63%65%
Share Price$8.15$5.96$4.76$0.58
Expected volatility was determined by calculating the average implied volatility of a group of listed entities that are considered similar in nature to the Company.