TerraVest Industries Inc. shares suffered a dramatic decline of more than 30% in late trading on Friday, following the company's announcement that its board would investigate allegations against Executive Chairman Charles Pellerin. The news struck a stock that had been trading near all-time highs earlier this year, triggering a sharp selloff on heavy volume.
As of 2:45 p.m. EDT, shares were down 30.54% to C$110.05, after opening at C$141.50 and briefly touching C$95.00, which marks both the session low and a 52-week trough. Trading volume surged to 1.27 million shares, roughly 14 times the normal daily average, underscoring the market's intense reaction to the governance concerns.
The allegations, first reported by the Journal de Montréal and citing a search warrant, involve Quebec's securities regulator, the Autorité des marchés financiers (AMF), which suspects Pellerin of sharing privileged information about TerraVest with family and friends ahead of the company's acquisition of EnTrans International. The AMF believes these tips may have generated nearly C$6.8 million in illegal profits. No formal charges have been filed, according to the report.
TerraVest stated that it became aware of the allegations following the news article and is taking the matter seriously. The board, excluding Pellerin, has initiated a review after consulting with legal counsel. The company also expressed its willingness to cooperate with regulators should they reach out.
The EnTrans deal, completed in March 2025, was TerraVest's largest acquisition to date, with an upfront payment of US$546 million and potential earn-outs of up to US$46 million. CEO Dustin Haw described the acquisition as "transformational for TerraVest" at the time. The company, which manufactures home heating units, transport equipment for propane and natural gas liquids, energy processing gear, and fiberglass tanks, has built its growth through a series of acquisitions.
The broader market was also under pressure, with the S&P/TSX composite index falling 1.1% to 34,805.40, weighed by jobs data from both Canada and the U.S. that fueled expectations of higher interest rates. However, TerraVest's decline far exceeded the index's drop, reflecting the specific governance and regulatory risks facing the company.
In a research note, 5i Research described the stock's nearly 30% drop as a "shoot first, ask questions later" move, adding that the selloff "feels a bit overdone." The firm noted that the company's underlying business remains operational, and no regulatory charges have been confirmed.
Despite the turmoil, TerraVest has continued to execute its acquisition strategy. On June 4, the company announced the purchase of Jet Peinture Plus, a Quebec-based propane tank refurbisher, using cash and existing credit lines. Earlier, on June 1, TerraVest acquired assets from B&R Repair, which operates transport services in Illinois, Pennsylvania, and Indiana, also funded with cash and credit.
The company's second-quarter results, released prior to the governance headlines, showed a mixed picture. Sales rose 42% to C$442.6 million, driven by acquisitions in 2025 and 2026, but net income plunged 62% to C$12.7 million. Adjusted EBITDA, a key profitability metric, increased 15% to C$75.5 million.
Investors are now focused on three key developments: the outcome of the board's review, any signals from regulators, and confirmation that TerraVest's July 10 dividend will be paid to shareholders of record as of June 30. The ongoing board review could potentially weigh on the company's acquisition strategy, access to financing, or management structure, but the company's operations continue as the investigation proceeds.