August 25, 2008 / 2:57 PM / in 9 years

Maple Leaf stock plunges as meat recall expands

WINNIPEG, Manitoba (Reuters) - Maple Leaf Foods Inc (MFI.TO) shares fell sharply on Monday after the company, one of Canada’s largest food processors, expanded a recall of prepared meats associated with a food poisoning outbreak that has killed four people.

<p>A sign for the Maple Leaf food processing plant is seen in Toronto August 21, 2008. REUTERS/Mark Blinch</p>

Maple Leaf recalled all meat products from a Toronto plant after health officials said they found meat samples contaminated with the same strain of listeria as that found in an outbreak that has made 21 people sick.

Reimbursing customers for returned products, cleaning the plant and other direct expenses will cost the company C$20 million ($19 million) before taxes, Chief Financial Officer Michael Vels told analysts on a conference call on Monday.

“Damage control and financial minimization at a time like this has not even been considered,” Vels said.

Maple Leaf shares were down 5.5 percent or 57 Canadian cents at C$9.23 on the Toronto Stock Exchange on Monday morning, after earlier hitting a low of C$8.62.

On top of the company’s initial cost estimate, it may face reduced sales and increased advertising costs, Vels said.

He declined to speculate on whether Maple Leaf would have any financial liability from lawsuits, but said the company has product liability insurance.

“No definitive link has been made between the listeria causing the illness and deaths, and Maple Leaf products,” Vels told analysts.

Health officials said they are investigating another 30 possible cases of listeriosis, an illness that is particularly dangerous for pregnant women, the elderly, infants and people with weak immune systems.

They said they may discover more cases because symptoms can take up to 70 days to appear.

Vels said the contamination was found in only a small number of products from two production lines, but Maple Leaf decided to voluntarily pull all meats produced from the Toronto plant, one of its 23 in the country.

Maple Leaf expects to reopen the Toronto plant on Tuesday after an extensive sanitation program supervised by outside experts, he said.

The company is double-checking procedures at all of its plants but has no reason to believe any other products are at risk of contamination, he said.

It’s unlikely Maple Leaf will be able to determine how its meat was contaminated, Vels said, explaining that the listeria bacterium is common and pervasive.

“It’s very, very, very difficult, if not impossible, to pinpoint a cause,” he said.

“I don’t know how important that is to consumers. I think our perspective is what’s more important is we let them know what’s going on and we take swift and conservative action to safeguard their health,” Vels said.

($1=$1.05 Canadian)

Reporting by Roberta Rampton; editing by Rob Wilson

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