SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
INFORMATION TO BE INCLUDED IN STATEMENTS FILED
PURSUANT
TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED
PURSUANT TO
RULE 13d-2(a)
(Amendment No. 1)*
Charge Enterprises, Inc.
(Name of Issuer)
Common Stock, $0.0001 par value per share
(Title of Class of Securities)
159610104
(CUSIP Number)
Arena Investors, LP
2500 Westchester Ave., Suite 401
Purchase, NY 10577
Attention: Lawrence Cutler
Telephone: (212) 612-3205
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
September 11, 2023
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously
filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule
because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box x.
Note. Schedules filed
in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
* The remainder of this cover page shall be filled
out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent
amendment containing information which would alter disclosures provided in a prior cover page.
The information required on the remainder of this
cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise
subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the
Notes.)
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Investors, LP
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
AF, OO
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
21,574,039 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
21,574,039 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
21,574,0391
| 12. | Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
9.99%1
| 14. | Type of Reporting Person (See Instructions) |
PN
1 This information is given as of the close of business
on September 8, 2023, the business day prior to the filing date of this Schedule 13D, and gives effect to beneficial ownership limitations
contained in the Issuer’s derivative securities as described in Item 5 hereof.
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Investors GP, LLC
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
AF, OO
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
21,574,039 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
21,574,039 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
21,574,0391
| 12. | Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
9.99%1
| 14. | Type of Reporting Person (See Instructions) |
OO
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Finance Markets, LP
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
WC
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
1,870,736 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
1,870,736 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
1,870,7361
| 12. | Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
0.9%1
| 14. | Type of Reporting Person (See Instructions) |
PN
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Finance Markets GP, LLC
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
AF
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
1,870,736 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
1,870,736 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
1,870,7361
| 12. | Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
0.9%1
| 14. | Type of Reporting Person (See Instructions) |
OO
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Special Opportunities Fund LP
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
WC
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
4,828,508 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
4,828,508 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
4,828,5081
| 12. | Check if the Aggregate Amount
in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
2.2%1
| 14. | Type of Reporting Person (See Instructions) |
PN
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Special Opportunities Fund (Onshore) GP,
LLC
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
AF
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
4,828,508 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
4,828,508 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
4,828,5081
| 12. | Check if the Aggregate Amount
in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
2.2%1
| 14. | Type of Reporting Person (See Instructions) |
OO
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Special Opportunities Partners I, LP
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
WC
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
7,134,587 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
7,134,587 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
7,134,5871
| 12. | Check if the Aggregate Amount
in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
3.3%1
| 14. | Type of Reporting Person (See Instructions) |
PN
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Special Opportunities Partners (Onshore) GP, LLC
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
AF
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Delaware
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
7,134,587 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
7,134,587 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
7,134,5871
| 12. | Check if the Aggregate Amount
in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
3.3%1
| 14. | Type of Reporting Person (See Instructions) |
OO
CUSIP No. 159610104
| 1. | Names of Reporting Persons |
Arena Structured Private Investments (Cayman), LLC
| 2. | Check the Appropriate Box if a Member of a Group (See Instructions) |
WC
| 5. | Check Box if Disclosure of Legal Proceedings is Required Pursuant
to Item 2(d) or 2(e) |
¨
| 6. | Citizenship or Place of Organization |
Cayman Islands
NUMBER OF
SHARES
BENEFICIALLY
OWNED BY EACH
REPORTING
PERSON WITH: |
7. SOLE VOTING POWER |
971,811 |
| 8. SHARED VOTING POWER |
0 |
| 9. SOLE DISPOSITIVE POWER |
971,811 |
| 10. SHARED DISPOSITIVE POWER |
0 |
| 11. | Aggregate Amount Beneficially Owned by Each Reporting Person |
971,8111
| 12. | Check if the Aggregate Amount
in Row (11) Excludes Certain Shares (See Instructions) ¨ |
| 13. | Percent of Class Represented by Amount in Row (11) |
0.5%1
| 14. | Type of Reporting Person (See Instructions) |
OO
EXPLANATORY NOTE
This Amendment No. 1 (this “Amendment No. 1”) to
the Schedule 13D originally filed on August 21, 2023 (the “Original 13D”) is being filed with respect to the beneficial
ownership of common stock, $0.0001 par value per share, of Charge Enterprises, Inc. This Amendment No. 1 supplements Items 4 and 7 and
the Exhibit Index of the Original 13D.
| ITEM 4. | Purpose of Transaction. |
On September 11, 2023, the
Investment Manager sent a letter to the board of directors of the Issuer, a copy of which is attached hereto as Exhibit 9, and issued
a press release regarding the same, a copy of which is attached hereto as Exhibit 10.
| ITEM 7. | Material to be Filed as Exhibits. |
SIGNATURE
After reasonable inquiry and to the best of its
knowledge and belief, the undersigned each certifies that the information with respect to it set forth in this Statement is true, complete
and correct.
Dated: September 11, 2023
Arena Investors, LP
Arena Investors GP, LLC
Arena Finance Markets, LP
Arena Finance Markets GP, LLC
Arena Special Opportunities Fund LP
Arena Special Opportunities Fund (Onshore) GP, LLC
Arena Special Opportunities Partners I, LP
Arena Special Opportunities Partners (Onshore) GP, LLC
Arena Structured Private Investments (Cayman), LLC
| By: |
/s/
Lawrence Cutler |
|
| Name: Lawrence Cutler |
|
| Title: Authorized Signatory |
|
EXHIBIT INDEX
Exhibit 9
September 11, 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”), and our letter, dated August 21, 2023 (the “August 21st
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”) 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, the August 21st Letter, and recent discussions with certain members
of your corporate executive management team (“Corporate 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 Charge 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.
After reflecting on our recent conversations with
both Corporate Management and the Board, your letter, which was sent to us immediately after your receipt of the August 21st
Letter (the “Charge Letter”), and the press release you issued on August 29, 2023 (the “August 29th
Press Release”), we remain deeply concerned that you have not addressed certain critical issues. Therefore, we urge the Board to
take several specific actions, which we believe will significantly enhance value for Charge’s shareholders. Unless the Board immediately
addresses our concerns, we believe the current trend of poor performance of Charge’s stock price (approximately 78% decline or a
loss of approximately $346M in market capitalization in the past year) will persist and Charge will not establish a presence among its
peers in its industry despite Charge’s potential for profitable growth.
Despite our general disappointment with your clear
lack of urgency, we were somewhat encouraged by the three points you communicated in the Charge Letter and the August 29th
Press Release, which we have summarized below:
| · | You acknowledged that there is a problem today, in that Charge’s current stock price does not reflect
the true value of the business. |
| · | You acknowledged that governance is a critical area of focus and corporate leadership is a significant
priority, and announced the appointment of Craig Denson as Charge’s interim CEO and Amy Hanson as the non-executive Chairperson
of the Board while your search for a permanent successor to Andrew Fox, the former CEO, is pending. |
| · | You communicated that you will develop strategies to integrate Charge’s services and products across
the infrastructure operating subsidiaries while driving cost synergies across the organization. |
Unfortunately, these steps are insufficient. We
believe the following actions must be taken immediately to significantly enhance value for all Charge shareholders:
| 1. | Elimination of a Staggered Board Structure: As we communicated to you in the February 28th
Letter and the August 21st Letter, the entire Board should be subject to annual elections to ensure the Board is fully accountable
to Charge’s shareholders. The “staggered board” structure that Charge currently has in place is inconsistent with best
practices in corporate governance. Therefore, we request that the Board call a special meeting of Charge’s shareholders to eliminate
the staggered board structure provided for in Charge’s charter and require that all directors be elected annually. |
| 2. | Reinvigoration of the Board: As we noted in our previous two letters, Charge’s underperformance
can be attributed, among other things, to the gap in the skill set of the directors comprising the Board, including the lack of sufficient
expertise in certain core areas such as corporate governance, finance, operations, marketing, and capital markets. In addition, given
the number of directors on the Board, the Board has demonstrated that it is unable to operate effectively and should be downsized to enable
it to act in a nimble and decisive manner. In order to bring relevant expertise in such core areas to the Board, a number of new directors
with the appropriate skill set and a commitment to creating value for all shareholders should be elected to the Board. The current Board
cannot conceal its under-performance by simply adopting an “external communications strategy” as stated in the August 29th
Press Release. We have previously suggested highly-qualified independent directors and would like to be consulted in the process of searching
for additional director candidates with the necessary skill set. As an initial step, we would like to be provided with a status update
on and a timeline for the search process following the completion of the “skills matrix” by Charge’s nominating and
governance committee as referenced in the Charge Letter. |
| 3. | Changes in Management/Operations: Charge needs a world-class corporate executive management
team to drive operational efficiencies and profitability. The underwhelming performance of current Corporate Management was recently underscored
by the failure to maintain compliance with Nasdaq listing standards. The Board should conduct a thorough search for a permanent CEO with
the help of appropriate advisors. Mr. Fox should not participate in any capacity in the search for his replacement. The Board should
conduct the search in the most efficient manner possible to ensure clear, long-term leadership is in place and Mr. Denson does not
have to act as the interim CEO for an extended period. In addition, the Board should immediately develop a talent acquisition strategy
to hire new members of the corporate executive management team with strong experience in, among other areas, equity and debt financing.
We request that you consult with us in the CEO search process and in developing such talent acquisition strategy so that we can be confident
the new CEO and other members of Corporate Management have the appropriate skill set to drive forward the changes we believe are necessary. |
| 4. | Engaging a Professional Interim Advisor: To manage this transition period successfully,
the Board should immediately engage and work with an experienced professional third-party interim advisor. Transition processes for public
companies can be challenging and working with a professional and experienced advisor would significantly help Charge with managing this
process appropriately and avoiding any pitfalls. |
| 5. | Integration and Incentivization of Subsidiaries: Beyond operational performance, Corporate
Management and the Board have displayed questionable skills to integrate and incentivize the subsidiaries of Charge to create value and
synergies across the business. You mentioned in the August 29th Press Release that you would develop strategies to integrate
Charge’s services and products across the infrastructure operating subsidiaries while driving cost synergies across the organization.
Such efforts are long overdue and necessary, but they should also be coupled with appropriate incentive mechanisms across the organization
by establishing performance metrics for subsidiary leadership and rewarding those who actively seek and implement synergy-driven collaborations. |
| 6. | Revisiting General and Administrative Costs: To ensure there is cost discipline, the Board
should immediately initiate an independent review of Charge’s corporate overhead and instill a culture of fiscal responsibility.
We request that you consult with us during this review so that we can be confident Charge will make any necessary expense reductions and
eliminate any bloated corporate general and administrative costs. |
| 7. | Rationalize Cost of Capital: Charge’s capital structure has not been managed appropriately.
The Board and Corporate Management should focus on securing new long-term debt financing arrangements with the assistance of a qualified
third-party debt capital markets placement firm to strive to rationalize its cost of capital. This will allow Charge to allocate its capital
to growth and innovation opportunities and increase its valuation. |
We note that establishing an “external communications
strategy” as referenced in the August 29th Press Release would be helpful, as transparent communication would help
to build trust and reduce the perceived risk associated with investing in Charge. However, enhanced communications are not a substitute
for necessary actions. It is not clear to us whether any meaningful action is being taken by the Board and Corporate Management in relation
to any of the above matters and we feel compelled to share this letter publicly in an attempt to prevent any further destruction of value
due to your failure to take decisive actions in a timely manner. The constructive action items we outline in this letter are in the best
interests of Charge and all its shareholders. We urge you to take necessary actions promptly and look forward to your response and constructive
dialogue with us for the next phase in Charge’s evolution.
We would like to clarify again that a certain
number of our shares were recently included in a resale registration statement filed by Charge only to fulfill Charge’s contractual
obligation, and we remain a long-term investor in Charge committed to realizing the company’s vast potential for value creation.
Meanwhile, we must continue to reserve all options and rights afforded to us as one of Charge’s largest shareholders.
Sincerely,
Lawrence Cutler
Arena Investors, LP
www.arenaco.com
Exhibit 10
Arena Investors Outlines Necessary Steps for
Charge Enterprises to Improve Corporate Management and Operations
| · | Large shareholder urges Charge to take immediate action to address significant underperformance |
| · | Believes changes announced by Charge on August 29, 2023 are insufficient for substantial value creation |
NEW YORK, Sept. 11, 2023 - 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 “Board”) to reiterate the urgent need for Charge to take decisive action to significantly
enhance value for its shareholders.
Responding to the press release published by Charge
on August 29, 2023, announcing certain leadership changes and the development of a strategic plan, Arena believes these changes are
insufficient and remains deeply concerned that Charge has neglected to address certain critical issues.
In its letter, Arena outlined the following necessary
steps for Charge to take to improve its corporate management and operations in order to reverse the current trend of poor performance,
including an approximately 78% decline in Charge’s stock and a loss of approximately $346M in market capitalization in the past
year:
| 1. | Elimination of a Staggered Board Structure: The entire Board should be subject to annual elections
to ensure the Board is fully accountable to Charge’s shareholders. |
| 2. | Reinvigoration of the Board: The Board has demonstrated that it is unable to operate effectively
and should be downsized to enable it to act in a nimble and decisive manner. In order to bring relevant expertise to the Board, a number
of new directors should be elected with the appropriate skill set and a commitment to creating value for all shareholders. |
| 3. | Changes in Management/Operations: The Board should conduct a thorough search for a permanent CEO
with the help of appropriate advisors. In addition, the Board should immediately develop a talent acquisition strategy to hire new members
of the corporate executive management team with strong experience in, among other areas, equity and debt financing. |
| 4. | Engaging a Professional Interim Advisor: To manage this transition period successfully, the Board
should immediately engage an experienced professional third-party interim advisor. |
| 5. | Integration and Incentivization of Subsidiaries: Develop strategies to integrate Charge’s
services and products across the infrastructure operating subsidiaries while driving cost synergies across the organization, coupled with
appropriate incentive mechanisms and performance metrics to reward those who actively seek and implement synergy-driven collaborations. |
| 6. | Revisiting General and Administrative Costs: The Board should immediately initiate an independent
review of Charge’s corporate overhead and instill a culture of fiscal responsibility. |
| 7. | Rationalize Cost of Capital: The Board and Corporate Management should focus on securing new long-term
debt financing arrangements with the assistance of a qualified third-party debt capital markets placement agent. |
As a long-term investor committed to realizing
Charge’s vast potential, Arena is confident that through stronger leadership, a more well-balanced board, a sound financial basis,
and a clear strategy with efficient execution, Charge can drive much needed expansion in electric vehicle charging infrastructure while
delivering substantial value to shareholders and benefits for customers, drivers and the environment.
The full text of the letter follows:
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”), and our letter, dated August 21, 2023 (the “August 21st
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”) 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, the August 21st Letter, and recent discussions with certain members
of your corporate executive management team (“Corporate 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 Charge 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.
After reflecting on our recent conversations with
both Corporate Management and the Board, your letter, which was sent to us immediately after your receipt of the August 21st
Letter (the “Charge Letter”), and the press release you issued on August 29, 2023 (the “August 29th
Press Release”), we remain deeply concerned that you have not addressed certain critical issues. Therefore, we urge the Board to
take several specific actions, which we believe will significantly enhance value for Charge’s shareholders. Unless the Board immediately
addresses our concerns, we believe the current trend of poor performance of Charge’s stock price (approximately 78% decline or a
loss of approximately $346M in market capitalization in the past year) will persist and Charge will not establish a presence among its
peers in its industry despite Charge’s potential for profitable growth.
Despite our general disappointment with your clear
lack of urgency, we were somewhat encouraged by the three points you communicated in the Charge Letter and the August 29th
Press Release, which we have summarized below:
| · | You acknowledged that there is a problem today, in that Charge’s current stock price does not reflect
the true value of the business. |
| · | You acknowledged that governance is a critical area of focus and corporate leadership is a significant
priority, and announced the appointment of Craig Denson as Charge’s interim CEO and Amy Hanson as the non-executive Chairperson
of the Board while your search for a permanent successor to Andrew Fox, the former CEO, is pending. |
| · | You communicated that you will develop strategies to integrate Charge’s services and products across
the infrastructure operating subsidiaries while driving cost synergies across the organization. |
Unfortunately, these steps are insufficient. We
believe the following actions must be taken immediately to significantly enhance value for all Charge shareholders:
| 1. | Elimination of a Staggered Board Structure: As we communicated to you in the February 28th
Letter and the August 21st Letter, the entire Board should be subject to annual elections to ensure the Board is fully accountable
to Charge’s shareholders. The “staggered board” structure that Charge currently has in place is inconsistent with best
practices in corporate governance. Therefore, we request that the Board call a special meeting of Charge’s shareholders to eliminate
the staggered board structure provided for in Charge’s charter and require that all directors be elected annually. |
| 2. | Reinvigoration of the Board: As we noted in our previous two letters, Charge’s underperformance
can be attributed, among other things, to the gap in the skill set of the directors comprising the Board, including the lack of sufficient
expertise in certain core areas such as corporate governance, finance, operations, marketing, and capital markets. In addition, given
the number of directors on the Board, the Board has demonstrated that it is unable to operate effectively and should be downsized to enable
it to act in a nimble and decisive manner. In order to bring relevant expertise in such core areas to the Board, a number of new directors
with the appropriate skill set and a commitment to creating value for all shareholders should be elected to the Board. The current Board
cannot conceal its under-performance by simply adopting an “external communications strategy” as stated in the August 29th
Press Release. We have previously suggested highly-qualified independent directors and would like to be consulted in the process of searching
for additional director candidates with the necessary skill set. As an initial step, we would like to be provided with a status update
on and a timeline for the search process following the completion of the “skills matrix” by Charge’s nominating and
governance committee as referenced in the Charge Letter. |
| 3. | Changes in Management/Operations: Charge needs a world-class corporate executive management
team to drive operational efficiencies and profitability. The underwhelming performance of current Corporate Management was recently underscored
by the failure to maintain compliance with Nasdaq listing standards. The Board should conduct a thorough search for a permanent CEO with
the help of appropriate advisors. Mr. Fox should not participate in any capacity in the search for his replacement. The Board should
conduct the search in the most efficient manner possible to ensure clear, long-term leadership is in place and Mr. Denson does not
have to act as the interim CEO for an extended period. In addition, the Board should immediately develop a talent acquisition strategy
to hire new members of the corporate executive management team with strong experience in, among other areas, equity and debt financing.
We request that you consult with us in the CEO search process and in developing such talent acquisition strategy so that we can be confident
the new CEO and other members of Corporate Management have the appropriate skill set to drive forward the changes we believe are necessary. |
| 4. | Engaging a Professional Interim Advisor: To manage this transition period successfully,
the Board should immediately engage and work with an experienced professional third-party interim advisor. Transition processes for public
companies can be challenging and working with a professional and experienced advisor would significantly help Charge with managing this
process appropriately and avoiding any pitfalls. |
| 5. | Integration and Incentivization of Subsidiaries: Beyond operational performance, Corporate
Management and the Board have displayed questionable skills to integrate and incentivize the subsidiaries of Charge to create value and
synergies across the business. You mentioned in the August 29th Press Release that you would develop strategies to integrate
Charge’s services and products across the infrastructure operating subsidiaries while driving cost synergies across the organization.
Such efforts are long overdue and necessary, but they should also be coupled with appropriate incentive mechanisms across the organization
by establishing performance metrics for subsidiary leadership and rewarding those who actively seek and implement synergy-driven collaborations. |
| 6. | Revisiting General and Administrative Costs: To ensure there is cost discipline, the Board
should immediately initiate an independent review of Charge’s corporate overhead and instill a culture of fiscal responsibility.
We request that you consult with us during this review so that we can be confident Charge will make any necessary expense reductions and
eliminate any bloated corporate general and administrative costs. |
| 7. | Rationalize Cost of Capital: Charge’s capital structure has not been managed appropriately.
The Board and Corporate Management should focus on securing new long-term debt financing arrangements with the assistance of a qualified
third-party debt capital markets placement firm to strive to rationalize its cost of capital. This will allow Charge to allocate its capital
to growth and innovation opportunities and increase its valuation. |
We note that establishing an “external communications
strategy” as referenced in the August 29th Press Release would be helpful, as transparent communication would help
to build trust and reduce the perceived risk associated with investing in Charge. However, enhanced communications are not a substitute
for necessary actions. It is not clear to us whether any meaningful action is being taken by the Board and Corporate Management in relation
to any of the above matters and we feel compelled to share this letter publicly in an attempt to prevent any further destruction of value
due to your failure to take decisive actions in a timely manner. The constructive action items we outline in this letter are in the best
interests of Charge and all its shareholders. We urge you to take necessary actions promptly and look forward to your response and constructive
dialogue with us for the next phase in Charge’s evolution.
We would like to clarify again that a certain
number of our shares were recently included in a resale registration statement filed by Charge only to fulfill Charge’s contractual
obligation, and we remain a long-term investor in Charge committed to realizing the company’s vast potential for value creation.
Meanwhile, we must continue to reserve all options and rights afforded to us as one of Charge’s largest shareholders.
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 approximately $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 / Forrest Gitlin
pro-arena@prosek.com
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