Houston SPAC Peridot Acquisition Corp. to take Toronto’s Li-Cycle Corp. public

A Houston-based blank-check company, also called a special purpose acquisition company or SPAC, has reached a deal to take North America’s largest lithium-ion battery resource recycling company public.

Houston-based Peridot Acquisition Corp. (NYSE: PDAC) will combine with Toronto-based Li-Cycle Corp., the companies announced Feb. 16. The combined company will be named Li-Cycle Holdings Corp. and will be listed on the New York Stock Exchange under the ticker symbol “LICY.” The deal is expected to close in the second quarter of 2021.

Ajay Kochhar, co-founder, president and CEO of Li-Cycle, and Tim Johnston, co-founder and executive chairman of Li-Cycle, will continue to lead the combined company. Alan Levande, chairman and CEO of Peridot, will join Li-Cycle’s board of directors. Levande most recently served as co-CEO of Dallas-based Covey Park Energy LLC, a natural gas company that was acquired for $2.2 billion in 2019 by Frisco, Texas-based Comstock Resources Inc. (NYSE: CRK).

Peridot’s initial public offering last fall raised gross proceeds of $300 million before deducting underwriting discounts and commissions and other offering expenses. At the time, Peridot said it was looking for a business combination deal with what it calls “mitigation and adaptation” companies — those that “focus on environmentally sound infrastructure, industrial applications and disruptive technologies that eliminate or mitigate greenhouse gas (GHG) emissions and/or enhance resilience to climate change.” Peridot was considering companies in sectors such as electrification, clean-fuel transportation, self-directed and autonomous mobility and related infrastructure, energy storage and efficiency, smart-grid technology, renewable energy, biofuels and synthetic fuels management, reuse and recycling of waste and water, as well as related environmental infrastructure, air emissions and carbon capture, utilization and storage, among others.

“Li-Cycle is at the forefront of one of the most crucial and under-penetrated markets in clean technology that is growing in lock-step with the electrification of mobility,” Levande said Feb. 16. “As the North American market leader, we believe Li-Cycle is a unique and compelling (environmental, social and governance) investment opportunity for investors looking to participate in the global energy transition.”

The deal values Li-Cycle at $975 million — or $1.67 billion when combined with the transaction proceeds. Assuming no redemption by Peridot shareholders, the deal will provide $615 million in gross proceeds to Li-Cycle, including Peridot’s IPO funds and a private investment in public equity at $10 per share. The $315 million fully committed, upsized common stock PIPE comes from investors including Neuberger Berman Funds, Franklin Templeton and Mubadala Capital; Peridot sponsor Carnelian Energy Capital; existing Li-Cycle investors, including Moore Strategic Ventures; and global marketing and strategic off-take partner Traxys.

The additional funding will help Li-Cycle grow globally, company executives said.

“We see a tremendous global market opportunity in front of us driven by the exponential growth of the electric vehicle market,” Johnston said. “Our ‘future-proofed’ technology can recycle any battery chemistry economically, and our closed-loop solution provides the essential raw material building blocks for batteries that are in critical demand. The partnership with the Peridot team is an exciting and important milestone in Li-Cycle’s journey, further enabling Li-Cycle to achieve our mission and grow in lockstep with our customers – in North America and globally.”

Citi is serving as sole financial adviser to Li-Cycle. Cowen is serving as capital markets adviser to Li-Cycle. UBS Investment Bank is serving as lead placement agent, and Barclays and Citi are serving as placement agents for the PIPE. UBS Investment Bank and Barclays are also serving as financial and capital markets advisers to Peridot. McCarthy Tétrault and Freshfields Bruckhaus Deringer are serving as legal advisers to Li-Cycle. Kirkland & Ellis and Stikeman Elliott are serving as legal advisers to Peridot. Infor Financial Inc. has provided a fairness opinion to the board of directors of Li-Cycle.