Li-Cycle(LICY) - 2024 Q4 - Annual Report

Financial Strategy and Funding - Li-Cycle's Cash Preservation Plan initiated on November 1, 2023, aims to reduce expenses and slow cash outflows by cutting staffing and curtailing operations at certain Spokes[29]. - The company expects to require significant funding before restarting the Rochester Hub project, with a loan facility of up to $475 million from the DOE[37]. - The company is exploring potential financing and strategic alternatives to enhance its operational capacity and financial health[13]. - Li-Cycle's reliance on the DOE Loan Facility, which provides up to $475 million, is crucial for its funding strategy[37]. - The company is facing challenges related to its history of losses and the need for additional funds to meet liquidity requirements[15]. - The company anticipates significant funding will be required before restarting the Rochester Hub project, with expectations to raise capital for its completion[13]. - The company is evaluating strategic alternatives and financing options to address its liquidity needs and operational challenges[15]. Operational Adjustments and Challenges - The company is re-evaluating its strategy for bringing on additional Spoke and Hub capacity in the near term due to current operational adjustments[13]. - Li-Cycle's operations may be impacted by the pause in construction of the Rochester Hub, affecting authorizations and permits[15]. - The company has paused operations at its Ontario Spoke in Kingston as of November 1, 2023, with work toward closure underway[71]. - The Company has paused operations at its New York Spoke as of November 7, 2024, and is also pausing the development of the Norway Spoke[67][68]. - The Company is undergoing a comprehensive review of the go-forward strategy for the Rochester Hub project, which is currently under development[81]. - The company is facing a history of losses and anticipates significant expenses for the foreseeable future, raising concerns about liquidity and capital requirements[15]. Market Outlook and Revenue Generation - Li-Cycle anticipates recognizing revenue from the sale of critical battery-grade materials, contributing to its future financial performance[13]. - The expected annual growth rate of the number of electric vehicles (EVs) is a key factor influencing Li-Cycle's market outlook[13]. - Li-Cycle's ability to attract new suppliers and secure feedstock is critical for meeting market demand for recycled materials[15]. - Li-Cycle's reliance on a limited number of customers for revenue generation poses a risk to its financial stability[15]. - Li-Cycle's revenues from the Rochester Hub are expected to be significantly derived from a limited number of customers, indicating potential revenue concentration risk[15]. - The company projects a significant annual growth rate in the number of electric vehicles (EVs), impacting the demand for recycled materials[13]. Project Development and Strategic Initiatives - The company plans to develop a Hub facility in Portovesme, Italy, in collaboration with Glencore to produce critical battery-grade materials[75]. - The company has established a Special Committee of independent directors to oversee the strategic review of its projects[81]. - The company is in the process of obtaining exclusive rights to use its trademarks and service marks in the countries where it operates[86]. - The Glencore Unsecured Convertible Note has a principal amount of $200.0 million due on May 31, 2027[45]. - The Glencore Senior Secured Convertible Note has an original aggregate principal amount of $75.0 million, with a conversion price adjusted to $4.24 per common share[43]. - The Company has issued KSP Convertible Notes with a principal amount of $100.0 million and an original conversion price of $13.43 per common share, adjusted to $107.44 per common share on the Share Consolidation date[52]. - The Share Consolidation will take effect on June 3, 2024, at a ratio of one post-consolidation common share for every eight pre-consolidation common shares[79]. - The Company completed an underwritten public offering for gross proceeds of approximately $15.0 million on January 16, 2025, with an additional $2.25 million from an over-allotment option exercised on January 27, 2025[83]. Operational Expansion - The company commenced operations at its Germany Spoke in Magdeburg on August 1, 2023[40]. - The Company is focused on achieving economies of scale in recycling and resource recovery through its centralized Hub facilities[48].