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UPDATE 1-New board of Brazil's BRF likely to keep top executives -sources

(Adds comments from sources, background on BRF's struggles,
paragraphs 3-14)

By Aluisio Alves and Ana Mano

SAO PAULO, April 16 (Reuters) - Executives at Brazilian food
processor BRF SA are likely to stay in charge after a
new board is elected this month, three people close to the
matter said, in a sign of confidence from key shareholders that
they can pull off a turnaround at the struggling food company.

"The current management is not to blame for its
predicament," said one of the sources on condition of anonymity.
"The current team has a clear vision of what needs to be done."

BRF declined to comment about the consequences of a board
election to be held on April 26.

BRF, Brazil's largest chicken processor, posted two straight
annual losses and has been tangled in a food safety probe that
resulted in plant closures and a ban on chicken exports to the
European Union.

In December, José Aurélio Drummond Jr took over as chief
executive officer from Pedro Faria, who was arrested and later
released in connection with the food probe.

The problems led shareholders Previ and Petros and Aberdeen
Asset Management Plc to push for a board shake-up.

The three shareholders, which hold a combined 27 percent of
the food processor, want to curtail the power of a rival group
led by current Chairman Abílio Diniz, according to the source.

Diniz and investment fund Tarpon Investimentos SA
, which has allied with him in the past, together own
12 percent of the company.

Attempts failed to find consensus among dissenting
shareholders on 10 new names to compose the board, leading
Aberdeen to suggest adoption of a cumulative voting system for
individual board members.

This may lead to divisions within the board, although no
potential disagreements will prevent strategic changes, the
source said.

On Wednesday, Institutional Shareholder Services recommended
that holders of BRF's New York-listed American depositary
receipts should abstain from the election if cumulative voting
is adopted.

"The (current) management deserves a lot of credit for
remaining focused despite all the noise at the board level," a
second source said.

BRF's planned turnaround will include a renewed focus on
processed foods over commodity products to improve profit
margins, the first source said. The new board will also give
more independence to executives, reducing Diniz's influence, the
person added.

Diniz's investment vehicle Península did not reply to a
request for comment.
(Reporting by Aluísio Alves and Ana Mano
Writing by Ana Mano
Editing by Chizu Nomiyama and David Gregorio)

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