April 27, 2018 / 4:02 PM / a year ago

UPDATE 2-Brazil's BRF board given leeway as shareholder rift subsides

(Recasts throughout to add Previ, Petros comments and quotes)

By Ana Mano

SAO PAULO, April 27 (Reuters) - The top shareholders of BRF SA said on Friday they will give the food company’s new board leeway to kick off a turnaround after two years of net losses partially caused by a food safety scandal and mismanagement of feed inventory.

Pension funds Previ and Petros, which own a combined 22 percent of the food processor, also said completion of the board overhaul this week ended a long boardroom battle waged by shareholders with dissenting views on how to rescue the company from its self-inflicted problems.

Previ and Petros reaffirmed they are long-term investors and plan to give BRF’s new board independence to diagnose problems and propose solutions.

“It is not up to us to devise a new strategy for the company,” Walter Mendes, head of Petros, told journalists on Friday, one day after investors elected 10 board executives for fresh two-year terms. “We will not be intrusive,” Gueitiro Genso, head of Previ, said in the same conference call.

A majority of BRF shareholders on Thursday chose Pedro Parente, the chief executive of oil company Petroleo Brasileiro SA as chairman, trusting his track record of leadership amid crisis to help turn the company around. .

BRF shares were virtually flat on Friday following his confirmation, but rose more than 20 percent after Parente was tapped to become chairman on April 18.

One of the new board’s priorities is finding a new chief executive for BRF after José Aurélio Drummond Jr resigned last Monday, succumbing to pressure stemming from the boardroom rift.

“This new board will have unity to carry out a turnaround plan,” Mendes said, adding that “dissent among shareholders is now in the past.”

Former Chairman Abilio Diniz, who said he suggested Parente’s name to the pension funds, exempted departing board members and current management for any blame for the company’s woes.

While conceding Brazil’s food safety investigation “had a devastating effect,” he added BRF could pull through even after the European Union banned exports, mainly chicken, from 12 of its plants.

“We requested a dissolution of the previous board because of the company’s bad results,” Mendes said. But Diniz disagreed: “The difficulties faced by the firm would have occurred with any board and with any management,” said the businessman, who still owns 4 percent of BRF.

During Diniz’s five-year stint as board chairman, BRF shares lost about 40 percent of their value. (Reporting by Ana Mano; editing by Bill Trott and Cynthia Osterman)

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