Early Warning Press Release in Respect of Li-Cycle Holdings Corp.

This press release is issued pursuant to National Instrument 62-104 – Take-Over Bids and Issuer Bids and National Instrument 62-103 – The Early Warning System and Related Take-Over Bid and Insider Reporting Issues

NEW YORK, March 13, 2024 /CNW/ - Glencore Canada Corporation (the "Company") announces that on March 11, 2024, the Company entered into an agreement (the "Note Purchase Agreement") to purchase a senior secured convertible note (the "Convertible Note") in an aggregate principal amount of US$75,000,000 (the "Principal Amount") (equal to approximately CAD$101,186,250 as of the date of the Note Purchase Agreement) of Li-Cycle Holdings Corp. (the "Issuer"), together with proposed amendments to the US$200,000,000 convertible note of the Issuer that was acquired by Glencore Ltd. in June 2022 (the "Existing Note") (together, the "Transaction"). As a result of the Transaction, the Company, together with its affiliates (collectively "Glencore") could hold more than 10% of the issued and outstanding common shares of the Issuer (the "Common Shares") upon conversion of the Convertible Note and the Existing Note.

The Convertible Note will mature on the fifth anniversary of closing and will be convertible into Common Shares of the Issuer at an initial conversion price of US$0.53 per common share. The Issuer will be entitled, at its election, to pay interest on the Convertible Note in cash or in kind ("PIK"). Cash interest payments will be based on the Secured Overnight Finance Rate ("SOFR") plus 5.0% per year, and PIK payments will be based on SOFR plus 6.0% per year. The Convertible Note is redeemable at the option of the Issuer at a redemption price equal to 100% of the then outstanding principal amount of the Note being redeemed plus accrued and unpaid interest.

Commencing with the delivery of financial statements for the fiscal year ending December 31, 2026, the Issuer will be required to redeem a portion of the outstanding principal amount of the Convertible Note in an amount (the "ECF Amount") equal to a specified percentage of the excess cash flow generated by the Issuer and its subsidiaries for the applicable fiscal year (less certain deductions and subject to pro rata application to certain other debt of the Issuer). On each redemption date, whether due to an optional or mandatory redemption, the Issuer will be required to issue to the Company a number of warrants entitling the Company to acquire a number of Common Shares of the Issuer equal to the principal amount of the Convertible Note being redeemed on such date divided by the then applicable conversion price, having an exercise price per share equal to the then applicable conversion price of the Convertible Note so redeemed and expiring on the sixth anniversary of the initial closing date (the "Redemption Warrants").

As part of the Transaction, Glencore and the Issuer have agreed to amend and restate the terms of the Existing Note in two tranches, each of which will include new terms that come into effect upon the occurrence of certain future events (the Existing Note, including outstanding PIK notes, as so amended and restated in two tranches, the "A&R Notes").

The first A&R Note will include modifications to the terms of the Existing Note that take effect on the date (the "First Modification Date") that is the earliest to occur of (a) the date that is one month after the effectiveness and initial funding, if any, 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 (the "Second Modification Date") that is the earliest to occur of (a) the first commercial production from the Rochester Hub, (b) construction costs exceeding the construction budget set forth in the project loan financing, and (c) June 1, 2026. At each Modification Date the following terms of each A&R Note, which mirror the Convertible Note, will take effect: the maturity will be amended to be five (5) years from the applicable Modification Date, the interest rate will be amended to match the interest rate applicable to the Convertible Note, mandatory redemption will be required (including, from the First Modification Date and the Second Modification Date, the ECF Amount in a pro rata amount across the A&R Notes (to the extent modified) and the Note), and the Issuer will provide guarantees and security for the A&R Notes consistent with the Convertible Note.

In addition, at each Modification Date the conversion price for the applicable tranche will be adjusted to be the lesser of * 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, and (y) US$9.95 per share (the current conversion price of the Existing Note).

On closing of the Transaction, the Company will acquire the Convertible Note. If the Company elected to convert the entire Principal Amount, the Company would hold 141,509,434 Common Shares, being approximately 44.3% of the issued and outstanding Common Shares on a partially diluted basis.

Glencore originally held the US$200,000,000 principal amount of the Existing Note which has increased on November 30, 2022, May 31, 2023, and November 30, 2023, by US$8,133,333, US$8,417,837, and US$8,806,415 respectively, on account of PlK interest. As of March 12, 2024, the outstanding principal amount of the Existing Note was US$225,357,585 which was convertible into an aggregate of 22,649,003 Common Shares of the Issuer, representing approximately 11.2% of the issued and outstanding Common Shares on a partially diluted basis. The Existing Note will be transferred to the Company on or prior to the closing of the Transaction.

If the Convertible Note and the Existing Note were converted in full at the conversion prices in effect at the closing of the Transaction, the Company would hold 164,158,436 Common Shares, representing approximately 47.9% of the issued and outstanding Common Shares on a partially diluted basis.

The Issuer has agreed to seat two additional nominees of Glencore on its Board of Directors for a total of three nominees. The first additional nominee is to be identified by Glencore (subject to customary approvals by the Issuer) and proposed for election at the Issuer's annual general meeting of shareholders to be held in 2024 and the second additional nominee to be proposed for election at the Issuer's annual general meeting of shareholders to be held in 2025, or, if earlier, upon the occurrence of a vacancy on the Issuer's board of directors (subject to the Issuer and Glencore mutually agreeing on such second nominee). Both additional Glencore nominees are not a Glencore Related Party (as defined in the Governance Letter Agreement defined below) and are to be independent under applicable Ontario securities laws, as well as under SEC and New York Stock Exchange ("NYSE") rules.

In addition, the Issuer entered into an amendment, effective as of March 11, 2024 ("Amendment No. 1"), to its limited duration shareholder rights plan entered into on October 31, 2023 (the "Rights Agreement") (collectively, the "Rights Agreement Amendment"), to amend the definition of "Acquiring Person" to exempt the Company or its affiliates and associates (such persons together "Glencore Canada and GC Affiliates") from the definition of Acquiring Person and to permit Glencore Canada and GC Affiliates' beneficial ownership in certain circumstances that would otherwise be in excess of the 20% trigger threshold calculated in the manner set forth in the Rights Agreement.

Amendment No. 1 provides that Glencore Canada and GC Affiliates will not be deemed an "Acquiring Person", either individually or together, solely by virtue of, or as a result of, (a) Glencore Canada and GC Affiliates' beneficial ownership of the Common Shares of the Issuer issuable upon conversion of the Existing Note, as may be amended and restated from time to time, including such Common Shares of the Issuer issuable pursuant to the Issuer's right to elect to pay interest-in-kind pursuant to the terms of the Existing Note or the issuance to Glencore Canada and GC Affiliates and the exercise of any warrants upon redemption of the Existing Note in accordance with its terms; (b) the valid and binding approval, execution, and delivery of the Note Purchase Agreement and the issuance of the Convertible Note; (c) the issuance to Glencore Canada and GC Affiliates of the Common Shares of the Issuer upon conversion of the Convertible Note, in whole or part, including any Common Shares of the Issuer issued in connection with any interest the Issuer elects to pay in-kind; (d) the issuance to Glencore Canada and GC Affiliates and the subsequent exercise of Redemption Warrants; and (e) the performance or consummation of any of the other transactions contemplated by the Note Purchase Agreement, the note purchase agreement for the Existing Note, the Existing Note or the Convertible Note (the foregoing actions, the "Permitted Events"); provided however, that notwithstanding the foregoing, Glencore Canada and GC Affiliates shall be deemed an Acquiring Person if Glencore Canada and GC Affiliates become the beneficial owner of such number of additional Common Shares of the Issuer representing in excess of 5.0% of the Issuer's Common Shares outstanding as of the date of the Note Purchase Agreement, other than subject to certain de minimis exceptions.

The definition of "Acquiring Person" is further amended to provide an exemption for any transferee of Glencore Canada and GC Affiliates, and any transferee of any such transferee, that, in any such case, has acquired beneficial ownership of Common Shares of the Issuer in accordance with the transfer restrictions set forth in the note purchase agreement for the Existing Note or the Note Purchase Agreement, as applicable, including beneficial ownership acquired as a result of the occurrence of one or more Permitted Events following such transfer and certain other de minimis exceptions, without triggering the exercisability of the rights.

At the closing of the Transaction, the Company, Glencore Ltd., Glencore plc and the Issuer will enter into a governance letter agreement (the "Governance Letter Agreement") which will terminate the existing amended and restated standstill agreement dated May 31, 2022 (the "Standstill Agreement"). Pursuant to the Governance Letter Agreement, Glencore has also agreed, among others things, not acquire beneficial ownership of additional Common Shares of the Issuer in excess of 5.0% of the then outstanding voting securities of the Issuer (subject to certain exceptions, including PIK interest and other Permitted Events or to seek to take the Issuer private, in each case, without the approval of a committee of disinterested directors of the Issuer and, in the case of a take-private transaction, the approval of a majority of the disinterested shareholders of the Issuer. The Company has also committed to not rely or cause the Issuer to rely on any exemption available to a "Controlled Company" pursuant to the NYSE rules.

Each of Glencore plc, Glencore International AG, Glencore Canada Corporation and Glencore Ltd. reserves the right to change its plans and intentions, at any time, as it deems appropriate. 

The Company and Glencore Ltd. are each wholly-owned indirect subsidiaries of Glencore plc, a globally diversified natural resource producer and commodities trading company.

An early warning report prepared pursuant to the requirements of National Instrument 62-103 - The Early Warning System and Related Take-Over Bid and Insider Reporting Issues by Glencore Ltd. has been filed on SEDAR+ at www.sedarplus.com under the Issuer's profile. To obtain more information or to obtain a copy of the early warning report to be filed in respect of this news release, please contact Glencore Ltd. at the contact details noted below.

About Glencore plc

Glencore is one of the world's largest global diversified natural resource companies and a major producer and marketer of more than 60 commodities that advance everyday life. Through a network of assets, customers and suppliers that spans the globe, we produce, process, recycle, source, market and distribute the commodities that support decarbonisation while meeting the energy needs of today. 

With around 140,000 employees and contractors and a strong footprint in over 35 countries in both established and emerging regions for natural resources, our marketing and industrial activities are supported by a global network of more than 40 offices. 

Glencore's customers are industrial consumers, such as those in the automotive, steel, power generation, battery manufacturing and oil sectors. We also provide financing, logistics and other services to producers and consumers of commodities.

Glencore is proud to be a member of the Voluntary Principles on Security and Human Rights and the International Council on Mining and Metals. We are an active participant in the Extractive Industries Transparency Initiative.

We recognise our responsibility to contribute to the global effort to achieve the goals of the Paris Agreement by decarbonising our own operational footprint. We believe that we should take a holistic approach and have considered our commitment through the lens of our global industrial emissions. Against a 2019 baseline, we are committed to reducing our Scope 1, 2 and 3 industrial emissions by 15% by the end of 2026, 50% by the end of 2035 and we have an ambition to achieve net zero industrial emissions by the end of 2050. For more detail see our 2022 Climate Report on the publication page of our website at glencore.com/publications.

The Company's head office is located at 330 Madison Ave, New York, NY. 10017

SOURCE Glencore Canada Corporation

Glencore Ltd., Martin Fewings, t: [phone], m: [phone], [email protected]