Concerns rising for future of Rochester hub project after Li-Cycle shares financial report

Rochester, N.Y. (WHAM) — Li-Cycle shared insight into its financial situation during a call with investors Monday to go over its third quarter financial report, after pausing construction on what would be a revolutionary electric vehicle battery facility at Eastman Business Park.

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Li-Cycle does not have a timeline for when construction would resume, and the financial update has one financial expert doubting if it ever will.

"Unfortunately, the sales and expenses are so far out of whack that without a dramatic restructuring of payroll, cutting operations or some other very lucky break, the company is not likely to stay in business, let alone complete the Rochester hub," said George Conboy, chairman of Brighton Associates.

Conboy said he would not be surprised if the company announces bankruptcy in the near future. He said Kodak hired a firm to do similar work just a few months before it announced bankruptcy in 2012.

"Li-Cycle just as an operating company has been losing $30 or $40 million every 90 days on sales of about $4 or $5 million. The numbers don’t come together here," Conboy said. "The company has been in existence since 2016. It appears they have never turned a profit, it appears now they are deeply insolvent, it makes me wonder why this company was a candidate for a loan of taxpayer money in the first place."

A company spokesperson could not answer many questions but shared that the company is optimistic about the future of the battery industry.

"We are working on completing our comprehensive review of the Rochester hub project, which includes our future contracting strategy," said Joe Morelle Jr., executive director of UNiCON, which represents the construction industry across the region. "We continue to value our relationships with our contractors and vendors."

Li-Cycle has received a $375 million loan commitment from the U.S. Department of Energy, but the company has to reach certain benchmarks before it can receive the money.

When the company announced it would pause the project in October, it came as a shock to construction crews and community leaders. It also led to legal action from shareholders.

"If you’re an investor, you have seen your investor shares for Li-Cycle go down by 75 percent just in the last couple of months," Conboy explained. "In the last month alone, down about 50 percent. The company is not headed to a good place, and investors should be reasonably concerned about the value of their investment."

Conboy evaluated several possibilities for Li-Cycle's current financial situation, including the state of the battery industry.

"There is not a clear path to how they were going to make money here," he said. "Clearly there is a market for their service, but there is not a big enough market for the service they are offering. Will there be next year, or five years from now? Possibly there will be, but battery technology is still evolving."

The facility is supposed to bring 270 jobs once complete, and more than 1,000 construction jobs for the expansion.

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