Toronto-based lithium battery recycler Li-Cycle is being accused of misleading shareholders about problems with a major expansion of its facility in Greece. Cost overruns prompted the company to shut down construction last month. The claims of fraud are raised in a federal lawsuit filed this week.
Li-Cycle began hedging on the $485 million project cost a few months after starting work last year at the Eastman Business Park site. The company gradually added more detail until settling on a new number – $560 million – this past August.
There was no statement of concern, only assurances that the company was closely tracking labor costs and that the project remained on track. Then Li-Cycle announced on Oct. 23 that it was temporarily pausing construction, blaming escalating project costs, and sending dozens of construction workers home.
The company has said it remains “fully-committed” to Rochester. Li-Cycle’s contractor is Florida-based MasTec, which filed notice with the state that it was laying off 102 workers effective Nov. 3.
There are two facilities at the park. One is referred to as a “spoke,” which employs about 40 people who take in and break down lithium batteries, creating a “black mass.” The recycled material then goes to the “hub” facility and is processed to create battery-grade lithium, nickel and cobalt. The hub employs about 50 people, and was supposed to grow to 320 with the expansion.
Li-Cycle claimed to have spent more than $270 million on the project through June. Officials said last month that engineering and procurement were nearly complete.
In the lawsuit, shareholder Rachel Davis seeks class action status, claiming she and others like her suffered significant losses as the company’s stock price dropped and has yet to recover.
The stock closed at $2.27 on Friday, Oct. 20. The announcement came the following Monday, pushing the price as low as $1.07. Li-Cycle closed at $1.66 on Thursday of this week.
The lawsuit, first reported by the Rochester Business Journal, seeks to hold company leadership liable for what Davis claims were false and misleading claims about company’s finances. She alleges that those statements – or what was omitted from them – artificially inflated the company’s stock price.
Source: WXXI News
