Li-Cycle Provides Organizational Structure Update
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Insights
The strategic shift by Li-Cycle Holdings Corp. to a centralized management model represents a significant operational restructuring. This move is designed to streamline operations and cut costs, with an anticipated $10 million in annual savings. From a financial perspective, the workforce reduction and the associated $8.3 million in severance costs suggest a short-term cash outflow which needs to be balanced against the long-term savings. Investors will likely monitor the execution of this transition closely, gauging its effectiveness in achieving the promised cost efficiencies.
Such restructurings can be a double-edged sword, potentially disrupting operations in the short term but offering improved margins and operational agility in the long term. The company's stock performance could be affected by how well these changes are communicated to the market and how quickly the benefits are realized. Furthermore, the strategic financing from Glencore and the leadership changes, including the appointment of a new interim CFO, may influence investor confidence depending on how these moves are perceived in terms of stability and strategic direction.
Li-Cycle's transition to a centralized management model can be seen as a response to the increasingly competitive and cost-sensitive lithium-ion battery recycling market. By reducing operational redundancies and fostering cross-functional partnerships, Li-Cycle aims to enhance its market position and operational efficiency. The announced changes in leadership, including the new COO and CCO roles, signal a strategic realignment towards a more integrated and cohesive global strategy.
Given the growing importance of sustainable practices and the critical role of battery recycling in the supply chain for electric vehicles and other technologies, Li-Cycle's focus on cost efficiency and strategic partnerships could strengthen its appeal to potential clients and partners. The market will be observing how these organizational changes affect Li-Cycle's ability to capitalize on the growing demand for battery recycling solutions and to navigate the complex regulatory and technological landscape of this industry.
The governance implications of Li-Cycle's organizational changes are notable. The shift in board composition, particularly with the anticipation of an independent Board Chair following the next annual general meeting, reflects a commitment to strong corporate governance practices. This move may be reassuring to shareholders concerned about oversight and strategic direction, especially in light of the recent financing agreement with Glencore, which grants them nomination rights.
The departure of the CFO and the transition to an interim CFO could raise questions about financial leadership continuity, but the planned support until May 31, 2024, for a smooth handover should mitigate some of those concerns. Investors typically favor stability and clear succession planning in financial leadership roles, as these are critical for maintaining investor confidence and ensuring strategic financial management.
Li-Cycle to transition from regional to centralized management model to increase efficiencies
Li-Cycle expected to generate approximately
As part of its previously disclosed ongoing comprehensive review and Cash Preservation Plan, which includes organizational right-sizing and right-shaping, the Company has made the strategic decision to transition from its regional management structure to a centralized model to better position the Company for future success and increase efficiencies.
Ajay Kochhar, Li-Cycle President and CEO, commented: “We are recalibrating our organizational structure to better align with the more focused priorities of Li-Cycle. We believe that a centralized model, and the consolidation of our operational and commercial teams, will increase efficiencies and facilitate cross-functional partnerships to enhance our planning process and ability to execute on our short- and long-term objectives. We remain focused on our key initiatives of completing our review of the go-forward plan for the Rochester Hub and evaluating additional financing and strategic alternatives after securing and closing the recent strategic financing from Glencore.”
To ensure the appropriate management organizational structure, the Company made the following leadership changes, effectively immediately:
Tim Johnston, Executive Chair, will transition to the role of interim non-executive Board Chair, where he will provide leadership, support, guidance and strategic advice to the Company. Considering Glencore’s nomination rights associated with the recently closed strategic financing, the Nominating and Corporate Governance Committee of the Board will be considering changes to Company’s Board and Committee composition, expected to be made immediately following Li-Cycle’s next annual general meeting in May 2024. It is expected that these changes will include identifying an independent Board Chair.
Conor Spollen, who has been with Li-Cycle since January 2022, has assumed the role of Chief Operating Officer (COO). In this role, Mr. Spollen will be responsible for Li-Cycle’s global Spoke operations driving safety, productivity, and cost-efficiency. In addition to overseeing Spoke operations, following the completion of the technical and economic review of the Rochester Hub project, he will be responsible for project delivery and the planned operation of the Rochester Hub. Mr. Spollen has more than 33 years of international mining and metallurgical experience, serving in leadership roles in a number of global companies, including at Vale, where he was, among other roles, Chief Operating Officer for Vale Base Metals’ operating mines and processing facilities in
Dawei Li, who has been with Li-Cycle since July 2021, has assumed the new role of Chief Commercial Officer (CCO). In his new role, Mr. Li will lead Li-Cycle’s global commercial function and consolidate the global team’s strategy and approach to continue building strong partnerships with key battery market players. He previously led Li-Cycle’s
With the changes to the centralized and reduced size of the organization, Debbie Simpson, Chief Financial Officer, will be leaving the Company to pursue new opportunities. Since joining the Company in December 2021, Ms.
The Company is pleased to announce that Craig Cunningham has joined Li-Cycle as its interim Chief Financial Officer, effective immediately. Mr. Cunningham has an extensive background in executive level leadership and brings more than 17 years of accounting, finance, operational, and capital markets experience. Most recently, he was Chief Financial Officer at Electra Battery Materials and prior to that served as Vice President and Regional Financial Officer at Kinross Gold.
With the change to a centralized organization model, Richard Storrie will cease serving as the Company’s Regional President,
“We would like to extend our sincere thanks to Ms.
In addition to the leadership changes, and as part of the Company’s Cash Preservation Plan and the change from a regional to a centralized management model, the Company is taking other steps to reduce its workforce, primarily at the corporate level. Overall, the Company expects to reduce approximately 60 positions, representing approximately
Mr. Kochhar continued, “I want to thank all of the impacted Li-Cycle team members, as they played a key role in helping us work towards our vision of creating a more sustainable lithium-ion battery supply chain. Although our Cash Preservation Plan is essential to position Li-Cycle for future success, we have deep appreciation and gratitude for their high-quality work and contributions and will provide the impacted Li-Cycle team members with support through a period of transition.”
About Li-Cycle Holdings Corp.
Li-Cycle (NYSE: LICY) is a leading global lithium-ion battery resource recovery company. Established in 2016, and with major customers and partners around the world, Li-Cycle’s mission is to recover critical battery-grade materials to create a domestic closed-loop battery supply chain for a clean energy future. The Company leverages its innovative, sustainable and patent-protected Spoke & Hub Technologies™ to recycle all different types of lithium-ion batteries. At our Spokes, or pre-processing facilities, we recycle battery manufacturing scrap and end-of-life batteries to produce black mass, a powder-like substance which contains a number of valuable metals, including lithium, nickel and cobalt. At our future Hubs, or post-processing facilities, we plan to process black mass to produce critical battery-grade materials, including lithium carbonate, for the lithium-ion battery supply chain. For more information, visit https://li-cycle.com/.
Forward-Looking Statements
Certain statements contained in this press release may be considered “forward-looking statements” within the meaning of the
These forward-looking statements are provided for the purpose of assisting readers in understanding certain key elements of Li-Cycle’s current objectives, goals, targets, strategic priorities, expectations and plans, and in obtaining a better understanding of Li-Cycle’s business and anticipated operating environment. Readers are cautioned that such information may not be appropriate for other purposes and is not intended to serve as, and must not be relied on, by any investor as a guarantee, an assurance, a prediction or a definitive statement of fact or probability.
Forward-looking statements involve inherent risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of Li-Cycle, and are not guarantees of future performance. Li-Cycle believes that these risks and uncertainties include, but are not limited to, the following: Li-Cycle’s inability to economically and efficiently source, recover and recycle lithium-ion batteries and lithium-ion battery manufacturing scrap, as well as third party black mass, and to meet the market demand for an environmentally sound, closed-loop solution for manufacturing waste and end-of-life lithium-ion batteries; Li-Cycle’s inability to successfully implement its global growth strategy, on a timely basis or at all; Li-Cycle’s inability to manage future global growth effectively; Li-Cycle’s inability to develop the Rochester Hub as anticipated or at all, and other future projects including its Spoke network expansion projects in a timely manner or on budget or that those projects will not meet expectations with respect to their productivity or the specifications of their end products; Li-Cycle's history of losses and expected significant expenses for the foreseeable future as well as additional funds required to meet Li-Cycle’s liquidity needs and capital requirements in the future not being available to Li-Cycle on acceptable terms or at all when it needs them; risk and uncertainties related to Li-Cycle’s ability to continue as a going concern; uncertainty related to the success of Li-Cycle’s Cash Preservation Plan and related past and expected near-term further significant workforce reductions; Li-Cycle's inability to attract, train and retain top talent who possess specialized knowledge and technical skills; Li-Cycle’s failure to oversee and supervise strategic review of all or any of Li-Cycle’s operations and capital project and obtain financing and other strategic alternatives; Li-Cycle’s ability to service its debt and the restrictive nature of the terms of its debt; Li-Cycle's potential engagement in strategic transactions, including acquisitions, that could disrupt its business, cause dilution to its shareholders, reduce its financial resources, result in incurrence of debt, or prove not to be successful; one or more of Li-Cycle's current or future facilities becoming inoperative, capacity constrained or disrupted, or lacking sufficient feed streams to remain in operation; the potential impact of the pause in construction of the Rochester Hub on the authorizations and permits granted to Li-Cycle for the operation of the Rochester Hub and the Spokes on pause; the risk that the
Li-Cycle assumes no obligation to update or revise any forward-looking statements, except as required by applicable laws. These forward-looking statements should not be relied upon as representing Li-Cycle’s assessments as of any date subsequent to the date of this press release.
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Investor Relations
Nahla A. Azmy
Sheldon D’souza
investors@li-cycle.com
Media
Louie Diaz
media@li-cycle.com
Source: Li-Cycle Holdings Corp.
FAQ
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