(Adds shareholder support for Furlan, paragraph seven)
By Ana Mano
SAO PAULO, April 17 (Reuters) - A major shareholder in embattled food processor BRF SA said on Tuesday that a prolonged leadership struggle could damage plans for a turnaround as the company prepares to overhaul its board of directors later this month.
BRF has posted two straight years of losses and was implicated in a food safety scandal that has resulted in plant closures and worker furloughs.
Luiz Fernando Furlan, the 15th largest shareholder of BRF, in a conference call on Tuesday said the company needs a board that will work as a team.
"Power struggles destroy value in the company," said Furlan, whose family formed the company that was later merged with rival Perdigao to create BRF. "The company needs to regain its leadership position and resume growth."
BRF shares earlier fell 4 percent on news of a possible European Union trade ban, but closed little changed after Furlan's remarks.
Key shareholders of BRF, including pension funds Petros and Previ, which own a combined 22 percent stake, are pushing for the replacement of the entire board, which they see as crucial to pull off a turnaround.
Shareholders Walter Fontana and Vicente Falconi have backed Furlan to become chairman of the board, and Luiza Trajano for vice chair, the company said in a securities filing.
Though the imminent board shakeup could entail changes in management, Furlan said top executives, including Chief Executive José Drummond, were only recently hired and "are doing a good job."
The company still needs to fill out a few executive slots, he said, but that can happen only after the board transaction is complete. Executives with a food industry background are preferred over those with a financial background.
Sources previously told Reuters that top executives were likely to stay after a new board is elected.
Furlan said there are currently 14 candidates proposed for 10 seats, a number that can grow as individual investors can propose other names, including on the day of a shareholders meeting on April 26, when the new board will be elected.
An impasse related to the candidates led Aberdeen Asset Management Plc, which supports both funds, to urge the adoption of a cumulative voting system allowing for voting on individual candidates rather than a predetermined slate.
Furlan's efforts to make peace among dissenting shareholders have been fruitless, he said in relation to negotiations between Petros, Previ and Península, the investment vehicle of current BRF Chairman Abilio Diniz. (Reporting by Ana Mano; Editing by Leslie Adler and Lisa Shumaker)