A Li-Cycle battery recycling facility in Kingston, Ont., in March, 2023. The company is putting itself up for sale after potential takeover by Glencore fell through.Lars Hagberg/The Globe and Mail
Li-Cycle Holdings Corp. LICYF is putting itself up for sale and may seek bankruptcy protection after a potential takeover by Swiss miner Glencore PLC fell through, the struggling Canadian battery-recycling company said on Thursday.
Toronto-based Li-Cycle also said chief executive officer Ajay Kochhar will step down from that role and resign from the board of directors as the company shuts two U.S. recycling facilities and lays off a number of employees to preserve cash.
It said it has hired a financial services company to assist in seeking buyers for some or all of its business, though Li-Cycle gave no assurance that the effort will result in a deal.
Without a transaction, Li-Cycle “will need to significantly modify or terminate its operations and may need to dissolve and liquidate its assets under applicable insolvency laws or otherwise file for insolvency protection,” it said in a statement.
Shares of Li-Cycle, listed on the U.S. OTC market, sank 63 per cent on Thursday to 11 US cents.
They have lost 98 per cent of their value over the past year as the former cleantech darling struggled with its finances and the suspension of its marquee project – a recycling facility in Rochester, N.Y. – as construction costs surged.
The U.S. Department of Energy agreed to advance Li-Cycle US$475-million last year to help it finish the plant – designed to process spent batteries from several North American locations. At that point, Li-Cycle pegged the total capital cost of the project at US$960-million. Even though the financing package closed, the company has not been able to draw on the loan because it didn’t meet certain conditions.
In March, Glencore – already a significant investor in Li-Cycle – disclosed that it had approached the company to discuss a possible deal that could help solve Li-Cycle’s growing operational and capital structure problems. But Li-Cycle said on Thursday that it and Glencore could not agree on a deal that would be in the best interests of the company and its stakeholders.
To preserve capital, the company said it will suspend operations at its recycling plants in Arizona and Alabama, and furlough 85 employees. It is also cutting 32 positions, mostly in its Toronto headquarters, it said. Its facility in Germany is currently still in operation.
Mr. Kochhar, who co-founded the company, will remain with it as an adviser in the sales process, Li-Cycle said.
William Aziz has been named chief restructuring officer. He had similar roles in the restructurings of Walter Energy Canada, Toronto Star Group and U.S. Steel Canada.
Meanwhile, Craig Cunningham has stepped down as chief financial officer and is being replaced on an interim basis by Michelle Faysal, Li-Cycle said.