Large shareholder urges Charge to take
immediate action to address significant
underperformance
Believes enhanced strategic direction,
leadership and governance will position Charge for substantial
value creation to benefit all stakeholders
Charge stands to benefit from immense need for
EV charging infrastructure, but change is needed to capitalize on
this opportunity
NEW
YORK, Aug. 21, 2023 /PRNewswire/ -- Arena
Investors, LP (and its affiliates, collectively, "Arena"), an
institutional asset manager that, together with investment funds
managed by it, is one of the largest beneficial owners of Charge
Enterprises, Inc. (NASDAQ:CRGE) ("Charge"), today sent a letter to
the Board of Directors of Charge. The purpose of the letter is to
urge the Board of Directors of Charge to take clear steps towards
improving Charge's current corporate management and operations,
with the goal of remedying Charge's dramatic underperformance,
including an approximately 78% decline in Charge's stock price in
the past year.
Arena is confident that, with better strategic direction and
significantly improved leadership and corporate governance, the
company can deliver strong profitability and growth while driving
much needed expansion in electric vehicle charging infrastructure,
delivering value for shareholders and benefits for customers,
drivers and the environment.
However, the current Board of Directors and management of Charge
have failed to take immediate actions to address these issues
despite Arena's multiple attempts to engage on these matters
constructively and privately over the past six months.
Disappointingly, they appear to be a roadblock to the much needed
changes that are required for Charge to reverse its disturbing
trend of poor operational execution and stock performance.
Arena and/or investment funds managed by it are the beneficial
owners of approximately 9.99% of the outstanding common stock of
Charge and the beneficial owner of other securities, which, upon 61
days' notice, are convertible into an additional 10% of the
outstanding common stock of Charge. Certain of Arena's shares were
recently included in a resale registration statement filed by
Charge to fulfill Charge's contractual obligation. However, Arena
remains a committed long term investor in Charge.
August 21, 2023
Board of Directors
Charge Enterprises, Inc.
125 Park Avenue, 25th Floor
New York, NY 10017
Dear Members of the Board of Directors,
As conveyed to you in our letter, dated February 28, 2023 (the "February 28th Letter"), we are again writing to
you on behalf of Arena Investors, LP and its affiliates ("Arena" or
"we") to reiterate the urgent need for Charge Enterprises, Inc.
("Charge" or the "Company") to take decisive actions in addressing
the significant underperformance of Charge's stock.
Arena is a global institutional asset manager that provides
creative solutions for those seeking capital who cannot be served
by conventional institutions, and we and/or investment funds
managed by us are the beneficial owners of approximately 9.99% of
the outstanding common stock of Charge and the beneficial owners of
other securities, which, upon 61 days' notice, are convertible into
an additional 10% of the outstanding common stock of Charge. As
noted in the February 28th Letter and
recent discussions with certain members of your corporate executive
management team ("Management") and board of directors (the
"Board"), this is a significant investment for us, and we, as one
of Charge's most enthusiastic shareholders, would like to see the
Company significantly enhance value for the benefit of all
shareholders through strong leadership, a well-balanced board, a
sound financial basis, a clear strategy and efficient execution. We
are extremely disappointed that our recent discussions with
Management have not led to any meaningful actions on your part to
advance these objectives. Given your failure to take the
time-sensitive and critical steps necessary to reverse the current
trend of poor performance and establish Charge as a leader among
its peers in the market, we are compelled to disclose this letter
to your other shareholders.
As noted, despite the quality of Charge's business and the
magnitude of its growth opportunity, Charge's shares have declined
approximately 78% in the past year. We believe the significant
underperformance of Charge's stock reflects shareholder frustration
with the lack of accountability of both certain members of
Management and the Board with respect to their failure to leverage
the Company's potential for profitable growth. Management and the
Board appear unwilling or unable to take necessary actions to
achieve that growth, and instead continue to oversee a declining
share price.
In our view, the Company's underperformance can be attributed to
multiple factors, many of which we have discussed, such as the lack
of leadership and public company experience of Management, failure
to fully integrate and support separate and discrete business
units, the inability to deliver a clear and concise go to market
strategy, and failure to achieve profitability.
We reiterate our belief that clear steps can and should be taken
to ameliorate such underperformance. However, in order to take
those steps, the Company needs better strategic direction and
significantly improved leadership and corporate governance. We are
deeply concerned that both Management and the Board are unable to
deliver on the Company's potential for profitable growth in light
of the clear gaps in skillset, including the lack of sufficient
expertise in certain core areas such as corporate governance,
finance, operations, marketing, and capital markets. We believe the
recent delay in reporting quarterly earnings underscores these
skillset gaps.
In addition, we believe that Charge's inability to recruit
additional top talent to enhance the members of its executive
business unit leadership teams is one of the key issues that Charge
faces today. From our experiences with other companies, we know
that poor recruitment and retention can become a significant
bottleneck to future growth if it is not addressed quickly. It is
essential that Management and the Board do not create obstacles to
future growth. To that end, we request, among other items, that the
Board carefully consider the skillset of Management and its
directors and potential ways to improve its talent acquisition
strategy.
We are also deeply concerned that the Company has joined the
ever-decreasing number of companies that have staggered their
boards, which is inconsistent with modern trends in corporate
governance. We believe that the Board should be fully accountable
to the shareholders of the Company, which accountability is best
served by annual elections of the entire Board. To that end, we
request that the Board take the requisite steps to eliminate the
"staggered board" feature provided for in the Company's charter and
to require that all directors be elected annually. We strongly urge
the Board to take such steps promptly.
We believe that addressing our concerns will send Charge on a
far stronger trajectory than the status quo and now is the time to
act. We have helped companies improve their capital allocation,
operating efficiency, and ultimately shareholder returns while
working behind the scenes across various industries. The fact that
this is the first public letter we have ever been compelled to
write should be cause for serious reflection and concern on the
part of the entire Board.
Certain of our shares were recently included in a resale
registration statement filed by Charge to fulfill Charge's
contractual obligation. However, as you may have learned from our
extensive engagement with you, we remain a committed long-term
investor in the Company. Our strong preference is to work with
Charge collaboratively regarding our ideas and we request a meeting
with Board representatives in that regard.
We urge you to consider our suggestions. We look forward to
hearing from you and seeing you take necessary actions
promptly.
Sincerely,
Lawrence Cutler
Arena Investors, LP
About Arena Investors, LP
Arena Investors, LP is an institutional asset manager
founded in partnership with The Westaim Corporation (TSXV: WED).
With $3.5 billion of assets under
management as of December 31, 2022,
and a team of over 100 employees in offices globally, Arena
provides creative solutions for those seeking capital in special
situations. The firm brings individuals with decades of experience,
a track record of comfort with complexity, the ability to deliver
within time constraints, and the flexibility to engage in
transactions that cannot be addressed by banks and other
conventional financial institutions.
See www.arenaco.com for more information.
Media Contact
Prosek Partners
Josh Clarkson / Lindsay Jablonski
pro-arena@prosek.com
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SOURCE Arena Investors