Lithium Americas Reaches Agreement with GM and US DOE Regarding First Draw on DOE Loan
VANCOUVER, British Columbia–(BUSINESS WIRE)–Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company”) today announced that together with General Motors Holdings LLC (“GM”), its joint venture (the “JV”) partner in the Thacker Pass lithium project (“Thacker Pass” or the “Project”), the Company has reached a non-binding agreement in principle (the “First Draw Terms”) with the U.S. Department of Energy (the “DOE”) to advance the first draw of $435 million (the “First Draw”) on the previously announced $2.26 billion DOE loan (the “DOE Loan”).
The key provisions of the First Draw Terms include:
- The DOE has agreed to defer $182 million of debt service over the first five years of the DOE Loan.
- The DOE will receive:
- 5% equity stake in the Company through warrants to purchase common shares of the Company at an exercise price of $0.01 per share (the “LAC Warrants”) and
- 5% economic stake in the JV (the “JV Units”) through warrants to purchase non-voting, non-transferable equity interest of the JV with an exercise price of $0.01 per unit (the “JV Warrants”).
- The Company will post an additional $120 million to DOE Loan reserve accounts, to be funded within 12 months of the DOE advancing First Draw.
- GM will provide additional support to the Project by amending its lithium offtake agreement with the JV (the “Offtake Agreement”) to permit the JV to enter into additional third-party offtake agreements for certain remaining production volumes not forecasted to be purchased by GM.
Jonathan Evans, President and CEO of Lithium Americas said,
We greatly appreciate the support of the Administration, General Motors and our partners in advancing this vital world-class project.
“Together, we are onshoring large-scale U.S. lithium production, strengthening America’s supply chain, creating exceptional jobs and enhancing our long-term energy security and prosperity.”
Shilpan Amin, Senior Vice President Global Chief Procurement and Supply Chain Officer of General Motors said,
We’re confident in the Thacker Pass project, which will reduce U.S. dependence on imported lithium and can support domestic manufacturing across many industries, such as aerospace, defense and electrical grid resiliency, in addition to automotive.
“We are pleased to see it move forward and appreciate the Administration’s support as GM continues to build a secure, resilient supply chain.”
As contemplated by the First Draw Terms, in the event that the DOE exercises the JV Warrants in full, the JV economic interests will (prior to funding of the additional $120 million reserve accounts discussed above) be 59% held by Lithium Americas, which will continue to be the manager of the Project, 36% by GM and 5% by the DOE, with voting interest in the JV remaining 62% for Lithium Americas and 38% for GM. GM will have a call right to purchase, or cause the JV to purchase, the JV Warrants or, if the JV Warrants have been exercised by the DOE, the DOE’s JV Units (the “Call Right”) following Thacker Pass achieving substantial completion if a price can be agreed upon between GM and the DOE at the time of the Call Right. If GM and the DOE cannot agree on the price to exercise the Call Right, the JV Warrants or the DOE’s JV Units, as applicable, will be exchanged for common equity in the Company pursuant to a conversion ratio agreed upon by the DOE, GM and the Company, (the “LAC Warrant Conversion Rate”). The DOE will have a put right to cause GM to elect to either (i) purchase, or cause the JV to purchase, the DOE’s JV Warrants or DOE’s JV Units, as applicable at fair market value or (ii) cause the DOE’s JV Warrants or DOE’s JV Units, as applicable, to convert to shares of common equity in the Company at the then applicable LAC Warrant Conversion Rate. The DOE will also be granted the right to have an appointed representative as an observer at the JV Board meetings for so long as the DOE holds JV Warrants, or JV Units.
The expected total DOE Loan amount decreased to $2.23 billion. The DOE Loan principal of $1.97 billion remains the same, while the estimated capitalized interest during construction decreased to $256 million, due to a lower projected interest rate of 5.0%. The interest rate that will be applied to amounts drawn under the DOE Loan remains unchanged at the applicable long-dated U.S. Treasury rate from the date of each draw with 0% spread. The DOE Loan tenor remains approximately 24 years from date of First Draw. The First Draw of $435 million is expected in Q4 2025.
GM’s existing Offtake Agreement allows GM to purchase up to 100% of production volumes from Phase 1 and up to 38% of total production volumes of Thacker Pass for 20 years. GM retains the right of first offer on remaining Phase 2 production volumes and, following expiration of its offtake agreements, life of mine offtake rights, at market price, for a percentage of all volumes from Phase 1 and Phase 2 of the Project. The Offtake Agreement will be updated to allow the JV to enter into firm volume commitments with third parties for certain remaining Phase 1 production volumes not forecasted to be purchased by GM.
The First Draw Terms are preliminary in nature and are subject to, among other risks, the factors discussed below under “Forward-Looking Statements.” In each case, the First Draw Terms remain subject to negotiation and completion of definitive agreements, corporate approvals and other customary conditions. There can be no assurances that definitive documentation memorializing the First Draw Terms will be completed on the terms currently contemplated or at all.
The Company intends to rely upon the exemption set forth in Section 602.1 of the TSX Company Manual, which provides that the TSX will not apply its standards to certain transactions involving eligible interlisted issuers on a recognized exchange.
TRANSACTION ADVISORS
Goldman Sachs & Co. LLC is serving as financial advisor, while Vinson & Elkins LLP is serving as U.S. legal counsel and Cassels, Brock & Blackwell LLP as Canadian legal counsel to Lithium Americas.
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Lithium Americas Reaches Agreement with GM and US DOE Regarding First Draw on DOE Loan, source
