Li-Cycle President CEO & Co-Founder Ajay Kochhar 

By Jarrett Banks

A number of promising developments is making the case that investors need to take a second look at Li-Cycle Holdings Corp. (NYSE: LICY), which recycles batteries and battery manufacturing scrap into new lithium-ion batteries for electric vehicles.

The company announced a $75 million infusion from metals miner Glencore Plc in March. It also has a conditional commitment for a Department of Energy loan of $375 million, and is reviewing restarting construction at its Rochester, N.Y., plant after a pause because of escalating costs.

A federal court recently dismissed a class action lawsuit with finality after investors failed to show securities fraud in a proposed class action over cost overruns at the Rochester hub. Li-Cycle’s hub-and-spoke business model involves reclaiming nickel, cobalt, and lithium in “spoke” facilities and converting the extracted metal powder to battery-grade materials.

“We firmly believe the long term fundamentals of the market are still strong,” said Li-Cycle President, CEO & Co-Founder Ajay Kochhar in an interview with IPO Edge. “We believe the recent steps we have taken, and working through this obstacle, will make our business resilient and even better positioned for long term success.”

The company has also seen strong regulatory and macroeconomic tailwinds, including the Inflation Reduction Act and the long-term secular trend towards electrification, since going public three years ago, when IPO Edge interviewed Mr. Kochhar.

Li-Cycle has also seen strong continued strong support from its customers, partners, and the communities in which it operates. The additional investment from Glencore builds upon its long-term partnership and further demonstrates its endorsement of Li-Cycle’s plans.

The company continues to attract and sign customers, including the largest OEMs in the world, such as Daimler Truck Holding AG, which makes it well-placed to be a preferred sustainable recycler in the global battery supply chain.

Li-Cycle remains focused on key priorities of driving down costs through its cash preservation plan, reviewing its go-forward strategy for the Rochester Hub, and evaluating additional financing and strategic alternatives, according to Mr. Kochhar.

This includes working closely with the U.S. Department of Energy on key technical, financial and legal workstreams to advance toward definitive financing documentation required for the $375 million loan.

“This is kind of like the renewed bottom floor,” said Kochhar. “We believe that we have a really strong solution. and I think the continued customer validation through all this just proves that.”