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Convertible debt
 12 Months Ended
Dec. 31, 2024
Debt Disclosure [Abstract]  
Convertible debt Convertible debt
As atDecember 31,
2024		December 31, 2023
KSP Convertible Notes (a)$119.3 $99.1 
Glencore Convertible Notes (b)243.8 189.0 
Total Convertible Debt at end of the period$363.1 $288.1 
The KSP Convertible Notes and the Second A&R Glencore Note are unsecured debt instruments and the First A&R Glencore Note and the Glencore Senior Secured Convertible Note are secured debt instruments. The amount of maturities and sinking fund
requirements for convertible debt instruments, with interest components rolled into principal, for each of the next five years are as follows as of December 31:
2025$— 
2026$164.2 
2027— 
2028— 
2029343.9 
Thereafter238.0 
Total$746.1 
(a)KSP Convertible Notes
As atDecember 31, 2024December 31, 2023
Principal of convertible note at beginning of period$119.3 $110.2 
Issuance of convertible notes14.4 9.1 
Principal of convertible notes at end of the period$133.7 $119.3 
Conversion feature at beginning of period$— $6.0 
Conversion feature issued— — 
Fair value gain on embedded derivative— (6.0)
Conversion feature at end of period$— $— 
Debt component at beginning of the period$99.1 $85.4 
Debt component issued14.4 9.1 
Transaction costs— — 
Accrued interest paid in kind(14.4)(9.1)
Accrued interest expense20.2 13.7 
Debt component at end of period$119.3 $99.1 
Total convertible debt at end of period$119.3 $99.1 
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 “KSP Convertible Note”) for a principal amount of $100 million to Spring Creek Capital, LLC. The KSP Convertible Note will mature on September 29, 2026, unless earlier repurchased, redeemed or converted. Interest on the KSP Convertible Note is payable semi-annually, and Li-Cycle is permitted to pay interest on the KSP Convertible Note in cash or by payment in-kind (“PIK”), at its election. Initially, 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% 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 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, subject to a floor of 1% and cap of 2%. On March 25, 2024, the Company amended the KSP Note Purchase Agreement to modify the interest rate terms of the KSP Convertible Note, by removing the SOFR floor of 1% and cap of 2% and including penalty interest upon an event of default consistent with the penalty interest provision of the Glencore Senior Secured Convertible Note. The amendment was accounted for as a debt modification and no gain or loss was recognized. After the amendment, the effective interest rate of the KSP Convertible Note is 18.7%. Interest payments are based on an interest rate of the SOFR published two business days before the interest date for the relevant interest payment period plus 0.58%.
The PIK election results in the issuance of a new note under the same terms as the KSP Convertible 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 KSP Convertible Note and the PIK note outstanding at that time to an affiliate, Wood River Capital, LLC. The Company has
elected to pay interest by PIK since the first interest payment date of December 31, 2021. The KSP Convertible Notes as at December 31, 2024, 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 
PIK NoteJune 30, 20247.2 
PIK NoteDecember 31. 20247.2 
Total$133.7 
At the option of the holder the KSP Convertible Notes may be converted into common shares of the Company at a conversion price as at December 31, 2024 of $101.59, subject to customary anti-dilutive adjustments. In view of the issuance of 7,228,200 common shares issued under the ATM Program during 2024, the conversion price was adjusted from $107.44 (as at the Share Consolidation date) to $101.59 (as at December 31, 2024) in accordance with the repricing mechanism under the KSP Convertible Notes. If the Company’s share price is equal to or greater than a certain price for a period of twenty consecutive trading 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 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 mandatory redemption upon a change of control event or redemption at the holder’s discretion upon an event of default. 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, 2024, 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, 2024, the Company recognized a fair value gain of $nil on the embedded derivatives (for the year ended December 31, 2023: gain of $6.0 million). The embedded derivatives were valued using the Binomial Option Pricing Model. The assumptions used in the model were as follows:
December 31, 2023December 31, 2024
Risk free interest rate4.1%4.4%
Expected life of options2.7 years1.72 years
Expected dividend yield0.0%0.0%
Expected stock price volatility65%82%
Share Price$4.68$1.79
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, 2024December 31, 2023
Principal of convertible note at beginning of period$225.3 $208.1 
Issuance of convertible notes102.2 17.2 
Principal of convertible note at end of period$327.5 $225.3 
Conversion feature at beginning of period$0.4 $16.5 
Change in the period:
Fair value gain for the year ended December 31, 2023(16.1)
Fair value loss on the conversion features embedded in the A&R Glencore Convertible Notes from January 1, 2024 to March 25, 20241.8 
Extinguishment of the conversion feature embedded in the A&R Glencore Convertible Notes as part of the modification(2.2)
Issuance of conversion feature embedded in Glencore Senior Secured Convertible Note59.0 — 
Issuance of the conversion feature embedded in the A&R Glencore Convertible Notes as part of the modification99.2 
Fair value gain on the conversion features from March 26, 2024 to December 31, 2024(106.9)
Conversion feature at end of period$51.3 $0.4 
Debt component at beginning of period$188.6 $164.9 
Change in the period:
Issuance of debt component21.2 17.2 
Accrued interest paid in kind(21.2)(17.2)
Accrued interest expense for the year ended December 31, 2023— 23.7 
Accrued interest and accretion expense from January 1, 2024 to March 25, 20245.9 — 
Extinguishment of the debt component related to A&R Glencore Convertible Notes as part of the modification(194.5)
Issuance of debt component of the Glencore Senior Secured Convertible Note48.0 — 
Issuance of the debt component of the A&R Glencore Convertible Notes as part of the modification124.4 
Accrued interest expense from March 26, 2024 to December 31, 202428.7 — 
Transaction costs(8.6)— 
Debt component at end of period$192.5 $188.6 
Total Glencore convertible debt at end of period$243.8 $189.0 
Reconciliation of net change in Convertible debt to Debt extinguishment loss in the year ended December 31, 2024
Extinguishment of the conversion feature embedded in the A&R Glencore Convertible Notes as part of the modification$(2.2)
Issuance of conversion feature embedded in Glencore Senior Secured Convertible Note59.0 
Issuance of the conversion feature embedded in the A&R Glencore Convertible Notes as part of the modification99.2 
Total change in the conversion features156.0 
Extinguishment of the debt component related to A&R Glencore Convertible Notes as part of the modification(194.5)
Issuance of debt component of the Glencore Senior Secured Convertible Note48.0 
Issuance of the debt component of the A&R Glencore Convertible Notes as part of the modification124.4 
Total change in the debt components(22.1)
Total net change in convertible debt in the year ended December 31, 2024133.9 
Proceeds from convertible debt(75.0)
Debt extinguishment loss$58.9 
On March 25, 2024, the Company amended, restated and consolidated, the Glencore Unsecured Convertible Note and the PIK notes issued thereunder, such that they were split into two tranches, each of which was subject to an event-driven modification, effective from the occurrence of: (a) for the first tranche (the “First A&R Glencore Note”), the earliest of the date that is one month after the effectiveness and closing of a project loan financing for the Rochester Hub, and December 31, 2024, and (b) for the second tranche (the “Second A&R Glencore Note” and together with the First A&R Glencore Note, the “A&R Glencore Convertible Notes”), the earliest of (i) the first commercial production from the Rochester Hub, (ii) construction costs exceeding
the construction budget set forth in the project loan financing, and (iii) June 1, 2026 (each such date in the case of the foregoing clauses (a) and (b), an applicable “Modification Date”).
The Modification Date under the First A&R Glencore Note occurred on December 9, 2024. As a result, the terms of the First A&R Glencore Note were automatically modified to be consistent with the corresponding provisions of the Glencore Senior Secured Convertible Note (as defined and described below): the maturity was amended to be five (5) years from the Modification Date, the interest rate was amended to match the interest rate applicable to the Glencore Senior Secured Convertible Note, mandatory redemption is required (including, from the Modification Date, the amount equal to a specified percentage of the excess cash flow generated by the Company and its subsidiaries for the applicable fiscal year (less certain deductions and subject to pro rata application to certain other debt of the Company) in a pro rata amount under the First A&R Glencore Note and the Glencore Senior Secured Convertible Note), and the Company provided guarantees and pari passu security for the First A&R Glencore Note on substantially the same terms with the Glencore Senior Secured Convertible Note. In addition, the conversion price for the First A&R Glencore Note was adjusted to be the lesser of (x) an amount determined on the basis of a 30-Day VWAP (volume weighted average trading price) having a reference date equal to the applicable Modification Date plus a 25% premium per share, and (y) valid conversion price on Modification Date. The amendment was accounted for as a debt extinguishment and the Company recorded $58.9 million as a debt extinguishment loss presented in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024. The First A&R Glencore Note, modified on December 9, 2024, matures on December 9, 2029. Interest on the First A&R Glencore Note is payable semi-annually, with Li-Cycle permitted to pay interest on the First A&R Glencore Note in cash or by PIK, at its election. Interest payments made in cash are based on an interest rate of the SOFR plus 5% per annum and plus 6% per annum if interest is paid in PIK. After the amendment, the effective interest rate of the A&R Glencore Convertible Notes and Glencore Senior Secured Convertible Note is 20.6%.
The Second A&R Glencore Note matures on May 31, 2027, unless the Modification Date applicable to it occurs earlier, in which case the maturity date is five years from the modification date. Interest on the Second A&R Glencore Note is payable semi-annually, with Li-Cycle permitted to pay interest on the Second A&R Glencore Note in cash or by 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%. Second A&R Glencore Note will be subject to similar amendments, security, guarantees, and adjustment of the conversion upon the occurrence of the Modification Date applicable to it, which is expected to occur in June 2026.
On March 25, 2024, the Company issued the Glencore Senior Secured Convertible Note for an aggregate principal amount of $75.0 million to Glencore Canada Corporation, a subsidiary of Glencore plc (LON: GLEN). The Glencore Senior Secured Convertible Note will mature on March 25, 2029, unless there is an earlier repurchase, redemption or conversion. Interest on the Glencore Senior Secured Convertible Note is payable semi-annually, with Li-Cycle permitted to pay interest on the Glencore Senior Secured Convertible Note in cash or by 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 5% per annum if interest is paid in cash or plus 6% per annum if interest is paid in PIK. If an event of default has occurred and is continuing, the interest rate will be the rate stated above, plus one percent (1%) per annum (an additional 1% will be payable in cash). The PIK election results in the capitalization of the interest by adding such interest amounts to the aggregate outstanding principal balance of the Glencore Senior Secured Convertible Note then outstanding on the applicable Interest Date.
All obligations of the Company with respect to the Glencore Senior Secured Convertible Note and, following the occurrence of the Modification Date applicable to it, the First A&R Glencore Note, are guaranteed by Li-Cycle Corp., Li-Cycle Americas Corp., Li-Cycle U.S. Inc., Li-Cycle Inc., Li-Cycle North America Hub, Inc. (the “Guarantors”), each a subsidiary of the Company, as well as by Li-Cycle Europe AG and Li-Cycle Germany GmbH (the “EMEA Guarantors” and together with the Guarantors, collectively the “Note Guarantors”). The Company and the Guarantors have also granted perfected, first priority security interests (subject to customary exceptions and permitted liens) in the assets of the Company and of its U.S. and Canadian subsidiaries, including intellectual property, and a pledge of the equity interests of each U.S. and Canadian subsidiary, all the material intragroup receivables and the material bank accounts of Li-Cycle Germany GmbH and Li-Cycle Europe AG held by such entities in their respective jurisdictions of organization, and equity interests in Li-Cycle Germany GmbH and Li-Cycle Europe AG held by Li-Cycle Europe AG and the Company, respectively.
The Glencore Senior Secured Convertible Note is subject to certain reporting and affirmative and negative operational covenants applicable to the Company and its subsidiaries (subject to customary baskets and exceptions to permit ordinary course transactions as set forth in the Glencore Senior Secured Convertible Note), including monthly, quarterly and annual financial reporting requirements, delivery of an annual operating budget and limitations on (a) the incurrence of indebtedness and liens, (b) dividends, distributions and repurchases or redemptions of capital stock, (c) certain payments in cash of indebtedness which is subordinated, junior lien or unsecured indebtedness, (d) acquisitions and other investments, (e) asset sales (including with respect to the Company’s Spoke facilities) and (f) affiliate transactions. The Glencore Senior Secured Convertible Note contains a
minimum liquidity covenant that requires us to maintain a minimum amount of liquidity of $10.0 million, to be tested monthly. In addition, the Glencore Senior Secured Convertible Note contains a capital expenditure covenant that restricts our ability to make capital expenditures in excess of $2.0 million in any transaction or series of related transactions, subject to certain exceptions.
The Company has elected to pay interest by PIK since the first interest payment on the Glencore Unsecured Convertible Note on November 30, 2022 and since the first interest payment on the Glencore Senior Secured Convertible Note on December 31, 2024. The First A&R Glencore Note, the Second A&R Glencore Note and the Glencore Senior Secured Convertible Note are referred to collectively as the “Glencore Convertible Notes”, and as at December 31, 2024, comprised the following:
NoteDate IssuedAmount Issued
First A&R Glencore NoteMarch 25, 2024$116.6 
Second A&R Glencore NoteMarch 25, 2024114.6 
Senior Secured Convertible Glencore NoteMarch 25, 202475.0 
PIKDecember 31, 202421.2 
Total$327.4 
At the option of the holder (a) the First A&R Glencore Note may be converted into common shares of the Company at a conversion price as at December 31, 2024 of $3.03 per share, (b) the Second A&R Glencore Note may be converted into common shares of the Company at a conversion price as at December 31, 2024 of $75.31 per share, and (c) the Glencore Senior Secured Convertible Note may be converted into common shares of the Company at a conversion price as at December 31, 2024 of $4.09 per share. 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 A&R Glencore Convertible Notes are also subject to mandatory redemption upon a change of control event or redemption at the holder’s discretion upon an event of default. The Company may redeem all or any portion of the Glencore Senior Secured Convertible Note and, following the occurrence of the Modification Date applicable to it, the First A&R Glencore Note, at any time by payment of an amount in cash equal to 100% of the principal amount of the notes being redeemed plus all accrued and unpaid interest thereon. Commencing with the delivery of the financial statements for the fiscal year ending December 31, 2026, the Company will be required to redeem a portion of the outstanding principal amount of the Glencore Senior Secured Convertible Note and the First A&R Glencore Note in an amount equal to a specified percentage of the excess cash flow generated by the Company and its subsidiaries for the applicable fiscal year (less certain deductions and subject to pro rata application to certain other debt of the Company). The Company is also required to redeem the Glencore Senior Secured Convertible Note and the First A&R Glencore Note for an amount in cash equal to the outstanding principal amount of the notes being redeemed and all accrued and unpaid interest thereon, plus a make-whole amount equal to undiscounted interest payments that would have otherwise been payable through maturity in the event of: (1) certain continuing events of default upon request by the holder, (2) certain bankruptcy-related events of default, and (3) upon a change of control transaction, unless, in each case, the Glencore Senior Secured Convertible Note and the First A&R Glencore Note, as applicable, is first converted by the holder. The change of control, an event of default, and mandatory redemption provisions 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, 2024, no conversion or redemption had taken place.
In connection with any optional redemption, and with respect to the Glencore Senior Secured Convertible Notes, any mandatory redemption and provided that the applicable holder has not elected to convert the Glencore Convertible Notes into common shares, the Company must issue warrants (“Glencore Warrants”) to the applicable holder on the optional redemption date or receipt of notice of redemption, as applicable, that entitle the holder to acquire, until the end of the applicable exercise period, a number of common shares equal to the principal amount of the Glencore Convertible Notes 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 applicable 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, 2024, the Company recognized a fair value gain of $105.1 million on
the embedded derivatives (for the year ended December 31, 2023: gain of $16.1 million). The embedded derivatives were valued using the Finite Difference Method. The assumptions used in the model were as follows:
December 31, 2023December 31, 2024
Risk free interest rate3.8%4.4%
Expected life of options3.4 years4.2 years
Expected dividend yield0.0%0.0%
Expected stock price volatility65%82%
Share Price$4.68$1.79
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.