Class action targets alleged conflicts in collapsed clean tech deal
Vestcor is facing allegations that it “orchestrated and significantly influenced” a tech merger now tied to the “complete collapse” of a portfolio company, while insisting the fallout is negligible for New Brunswick pensioners, according to CBC News.
A petition filed in British Columbia seeks court approval for a class-action lawsuit against Fredericton-based Vestcor Inc. and its vice-president of equities, Mark Holleran, over Exro Technologies’ 2024 acquisition of SEA Electric Inc.
The company manages $23bn in assets for New Brunswick public sector employees and retirees, including civil servants, teachers, hospital workers and Crown corporation staff.
According to the court filing cited by CBC News, Vestcor was Exro’s majority shareholder and also held 14.3 percent of SEA’s preferred shares at the time of the deal, meaning it was “acting both as a seller and a buyer.”
The petition alleges Vestcor and Holleran “acted in bad faith and/or conflicts of interest” as “de facto directors and/or officers” of Exro.
CBC News reported that Exro paid $300m to acquire SEA Electric after telling shareholders SEA would generate $200m in profits in 2024, a forecast the petition calls “delusional.”
The filing says “these facts and circumstances reflected within those representations were the basis of the grossly inflated valuation assigned to SEA Electric” and alleges “those purported facts and circumstances did not exist, or the manner of their representation in the material change report was false or misleading.”
The petition further claims Vestcor and Holleran did this “in order to manage, or salvage, their significant investment in SEA Electric”.
Exro has since been delisted from the Toronto Stock Exchange, after disclosing in November 2024 that its revenue projections would fall far short of earlier claims and recording a $226m loss, including a $211m hit to the value of SEA Electric’s assets.
The petition says those losses led to “the complete collapse” of Exro.
On the pension side, the petition’s lawyer, Sage Nematollahi, told CBC News that Vestcor “has lost a lot of money” as Exro’s majority shareholder, tying up “significant funds from pensioners in New Brunswick [with] this investment that has not done great.”
In contrast, Vestcor CEO Sean Hewitt said in an emailed statement that the impact of the Exro–SEA exposure is “negligible” to Vestcor’s overall investment performance, estimating it at a fraction of one per cent of total assets.
“Given the robust funded positions of our clients’ pension plans, and continued strong investment performance, there is no impact to the monthly income of pensioners,” Hewitt said.
Vestcor managed $23bn in 2024, up $2bn from 2023, and is owned by the province’s two largest pension plans for civil servants and teachers, having replaced a government-owned agency in 2016, CBC News reported.
It also manages other investment funds, including the University of New Brunswick’s endowment.
The BC petition was filed on behalf of two shareholders: British Columbia resident Bryan Irwin, who held 27,500 Exro common shares worth $22,000 at the time of the merger, and Ontario investor Mike Zienchuk, who owned 900,000 shares.
Nematollahi told CBC News that about 500 additional shareholders have contacted his office about joining if the case is certified as a class action, adding, “There could be thousands of shareholders out there.”
Separately, Zienchuk and another investor, Allan Crosier, have launched a lawsuit in Alberta against Exro, two former company officials, its financial advisers and its insurance underwriters.
Hewitt said Vestcor’s “legal team is currently evaluating the merits of this lawsuit” and added, “We have no reason to believe in their veracity,” referring to the claims.
CBC News noted that the allegations in the petition have not been proven in court and that Vestcor has yet to file a response.
Exro had positioned itself as a clean tech company designing and building power electronics to improve the efficiency and cost-effectiveness of electric vehicles and energy storage systems before its collapse.
