October 28, 2010 / 1:24 PM / in 7 years

UPDATE 3-Two Maple Leaf directors quit over strategic plan

* Teachers’ directors resign in dispute over board minutes

* Maple Leaf posts Q3 share loss C$0.12 on pretax changes

* Adjusted EPS C$0.23 meets analysts’ forecast

* Shares edge lower (Adds CEO’s comments from conference call, analyst’s comments)

By Rod Nickel

WINNIPEG, Manitoba, Oct 28 (Reuters) - Two directors of Maple Leaf Foods (MFI.TO), who represented a key shareholder, have resigned from the company’s board in a dispute related to the food processor’s strategic plan.

Wayne Kozun and William Royan represented the Ontario Teachers’ Pension Plan, which has a 25 percent stake in the big Canadian food processor. Earlier this year Teachers’ sold a 10 percent stake in Maple Leaf to activist hedge fund West Face Capital.

The directors resigned in a disagreement related to Maple Leaf’s recently announced plan to drive up earnings through a massive capital investment in its plants, the company said in a release.

The Teachers’ representatives had asked that board minutes be changed to reflect that they approved the plan subject to a management analysis of prefunding options, specifically the sale of Maple Leaf’s rendering business.

The board instead confirmed its minutes, which showed unanimous approval for the plan.

Maple Leaf management has been under pressure from some shareholders over the performance of its stock, which had shown little growth until West Face bought its stake in August.

The resignations are hardly surprising, said analyst Robert Gibson of Octagon Capital.

“I believe Teachers is on record that they want to sell their entire block,” he said. “Therefore, no reason to stay on the board. It is a nonevent.”

Chief Executive Michael McCain said little about the resignations during a conference call. “It’s not a touchy subject at all,” he said.

Teachers’ spokeswoman Deborah Allan confirmed its representatives have quit the Maple Leaf board but had no further comment.

Maple Leaf shares on the Toronto Stock Exchange, which had been halted ahead of the news of the resignations, reacted little, slipping 1 Canadian cent to C$12.06.

Maple Leaf reported a third-quarter loss on Thursday after taking C$48.1 million in charges -- most of which relate to its plan to sell its Burlington, Ontario, pork plant and its closure of several Ontario bakeries -- but its adjusted earnings matched expectations.

Toronto-based Maple Leaf, which processes hogs and poultry and runs a large bakery operation, lost C$16.1 million ($15.6 million), or 12 cents a share, in the quarter to Sept. 30.

It earned C$22.5 million in the same quarter a year earlier.

McCain said the company was grappling with rising raw grain and meat costs during the quarter. “The story for 2010 is largely managing through food inflation,” he said.

Adjusted for one-time items, Maple Leaf reported earnings per share of 23 Canadian cents, up from 21 cents a year earlier.

Sales were little changed from the year-before quarter at C$1.29 billion.

Analysts had expected Maple Leaf to report earnings of 23 Canadian cents a share for the quarter, on revenue of C$1.29 billion, according to Thomson Reuters I/B/E/S.

$1=$1.02 Canadian Reporting by Rod Nickel; editing by Peter Galloway

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