April 11, 2018 / 9:47 PM / 3 months ago

Proposed BRF chairman refuses role on alternate list, deepening rift

SAO PAULO, April 11 (Reuters) - The man tapped by pension funds to preside over the board of BRF SA, Brazil's largest chicken processor, said he refused to take part in an alternative board lineup, deepening a rift between the food company's shareholders.

Augusto Cruz, who was nominated to be chairman by pension funds Previ and Petros, said he was surprised to learn his name had been included in an the alternative list unveiled by BRF in a securities filing on Friday.

"I was not contacted about taking part in the alternative board," Cruz told Reuters in a telephone interview on Wednesday. "I am not a part and I don't agree to be a part of any other board composition," he said.

Cruz said he was fully committed to the plan spearheaded by Petros and Previ, which together own 22 percent of BRF, to turn around the company after losing 1.1 billion reais ($325 million) last year, its worst-ever annual result.

Cruz also said he had told securities watchdog CVM and BRF's investor relations department on Wednesday about his decision not to join the alternative list of board candidates.

BRF declined to comment. CVM confirmed receiving a formal communication regarding the matter, without elaborating.

An extraordinary board meeting is scheduled for April 26 to elect a new board. A dissolution of the board would likely shake up management and remove current Chairman Abilio Diniz, a retail magnate who took the reins five years ago and owns nearly 4 percent of the company.

Diniz was behind the proposal of the alternative list, according to a person familiar of the matter.

Representatives for Diniz did not immediately comment on his relationship with the alternative board line-up.

The company is also ensnared in a food safety probe into whether its executives bribed inspectors to evade safety checks.

The investigation, which led to a ban of BRF chicken exports to the European Union, forced the food company to send thousands of workers on paid leave as it trimmed output.

BRF shares, which are down almost 39 percent this year, rose 5 percent on Wednesday, their strongest session in a month.

$1 = 3.38 reais Reporting by Ana Mano; editing by Diane Craft

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