Li-Cycle (LICY) to Redeem All Outstanding Warrants

Li-Cycle (NYSE:LICY) announced this morning that it will redeem all outstanding warrants on January 26, 2022 at a price of $0.10 per warrant.

Warrantholders have until this date to choose to either exercise these 1/2 warrants to purchase shares at $11.50 per share or surrender them on a cashless basis. In this latter case, the warrantholder is to receive a number of shares determined by the date of the redemption notice and the VWAP of shares for the 10 days following the notice. Warrants redeemed in this way will be exchanged for a maximum of 0.361 shares according to the formula.

Now marks a fortuitous time for Li-Cycle to call its warrants because its stock has been tumbling from a high at $14.26 on November 17. On December 20, it slipped below $10, but Li-Cycle was entitled by the warrant agreement to redeem all warrants if its stock finished above $10 for 20 of 30 days ending on the third day before giving notice.

Should its current slump continue, Li-Cycle may have had to wait a while longer before another window would present itself to clear its warrant overhang and get on to the next stage of its life as a de-SPAC. Li-Cycle may also return to the higher prices it hit in September through November, but if it does not, then most warrantholders will likely exercise their warrants on a cashless basis, which would bring less dilution to the company.

Li-Cycle completed its $1 billion combination with Peridot on August 5. Toronto-based Li-Cycle recycles spent lithium batteries and resells their constituent elements to off-takers in a broad number of industries.