UPDATE 2-Maple Leaf Foods investor calls for board changes

* West Face Capital owns 10 pct of food processor

* Maple Leaf shares jump 4 pct in Toronto
(Adds West Face and analyst’s comment, details)

By Rod Nickel

WINNIPEG, Manitoba, Dec 3 (BestGrowthStock) – Activist investor
West Face Capital called on Friday for a special meeting of
Maple Leaf Foods (MFI.TO: ) shareholders, saying it is concerned
about how the company’s board of directors operates.

Investors have expected the hedge fund to push for changes
since it bought a 10 percent stake in Maple Leaf in August, and
its move helped drive up the company’s shares by 4 percent on

West Face, Maple Leaf’s second-biggest shareholder, called
for the special meeting to allow shareholders to push for a new
board with less influence from major investors, who include
Chief Executive Michael McCain and his family.

West Face partner Thomas Dea said management and the board
had rebuffed the fund when it raised concerns about board
independence and corporate governance.

“We have concluded that the board needs to hear a strong
message from shareholders that the independence and governance
practices of Maple Leaf do not satisfy their expectations or
today’s standards of good corporate governance,” Dea said in a

A Maple Leaf spokesperson could not be reached for

West Face bought its stake in the Toronto-based food
processor from the Ontario Teachers’ Pension Plan. The pension
plan had been the second-largest shareholder in Maple Leaf
until it sold its 25 percent stake late last month in a
secondary offering for more than C$362 million ($362 million).

The biggest shareholder is McCain Capital Corp with about
32 percent.

“I think (West Face) was getting nowhere with the current
directors,” said analyst Robert Gibson of Octagon Capital in
Toronto. “They want the board to act, so now they’re saying the
board isn’t independent enough.”

The current Maple Leaf board was assembled while McCain
Capital had majority shareholder support through an agreement
with Teachers’, but that arrangement expired in June, West Face

With Teachers’ gone, independent directors already hold
majorities on the board and committees, Gibson said.

Maple Leaf is required under the Canada Business
Corporations Act to set a meeting date within 21 days, after
which West Face can call it, West Face spokesman John Lute said
in an interview.

The meeting would allow shareholders to vote on five
nonbinding advisory resolutions, including moves to shrink the
board’s size, ensure most board directors are independent and
review its approach to executive compensation.

At least in theory, the appeal to shareholders shouldn’t
affect Maple Leaf’s performance, Gibson said, although it will
surely require attention from CEO McCain as the company carries
out a C$1-billion plan to boost earnings.

McCain, however, is well-versed in managing with
distractions, having taken the company through a deadly meat
recall in 2008, Gibson said.

Maple Leaf shares rose 44 Canadian cents to C$11.62 on the
Toronto Stock Exchange on Friday.

($1=$1.00 Canadian)
(Reporting by Rod Nickel; editing by Peter Galloway)

UPDATE 2-Maple Leaf Foods investor calls for board changes