Li-Cycle Holdings Corp. has completed the sale of key assets to its largest secured creditor, Glencore, for a two-line summary. This transaction, conducted via a credit bid, concludes the company's court-approved sale and restructuring process under creditor protection.
Li-Cycle Holdings Corp., a prominent player in the lithium-ion battery recycling industry, has officially concluded the sale of a significant portion of its assets to Glencore Canada Corporation. The transaction, executed through a "credit bid" and the assumption of certain liabilities, marks the end of a court-approved sale and investment solicitation process for the financially distressed company.
The sale includes Li-Cycle's pre-processing facilities, known as "Spokes," in Germany, Arizona, Alabama, New York, and Ontario. These facilities are designed to safely shred lithium-ion batteries and manufacturing scrap to produce "black mass," a valuable intermediate product containing critical minerals like lithium, cobalt, and nickel. Crucially, the deal also transfers the company’s intellectual property portfolio and the flagship Rochester Hub project, a post-processing facility intended to refine the black mass into battery-grade materials. The Rochester Hub's construction has been paused due to rising costs, but its acquisition by Glencore highlights its strategic importance.
The conclusion of this process follows Li-Cycle’s filing for creditor protection under the Companies' Creditors Arrangement Act (CCAA) in Canada and Chapter 15 of the U.S. Bankruptcy Code. These filings were made in May after the company faced mounting financial challenges, including an event of default on a loan from the U.S. Department of Energy and its convertible notes held by Glencore. The CCAA and Chapter 15 processes provided a legal framework for Li-Cycle to restructure its affairs and seek a buyer for its assets.
Glencore, a global mining and commodity trading giant, has been a key strategic partner and investor in Li-Cycle for years, designating the company as a preferred recycling partner and providing over $275 million in financing since 2022. This prior investment positioned Glencore as the company's largest secured creditor. The use of a credit bid in the sale process allowed Glencore to acquire the assets by essentially using a portion of the debt owed to it as currency, rather than paying with new cash. This mechanism is common in insolvency proceedings and gives secured creditors a significant advantage in the bidding process.
For Glencore, the acquisition represents a major strategic move to expand its footprint in the circular economy for battery materials. The purchase of Li-Cycle's Spokes, the Rochester Hub project, and the intellectual property portfolio provides Glencore with established infrastructure and technology to accelerate its involvement in the critical battery supply chain.
