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May 4 (Bloomberg) -- Gafisa SA is appealing to international shareholders, who hold 57 percent of the Brazilian homebuilder’s stock, to support the company’s slate of board nominees at a meeting next week.

“An important part of our shareholders may be on the sidelines in the process,” Chief Executive Officer Alceu Duilio Calciolari said in an interview today. “The company can change without their opinion.”

Investors holding about 7 percent of the stock, including Rio de Janeiro-based fund managers Polo Gestao de Recursos Ltda. and Rio Bravo Investimentos, are challenging Gafisa’s nominees after the stock plunged 57 percent in the past year, saying current management isn’t capable of turning around the company, which reported a fourth-quarter loss of $537 million.

Control of the board at Brazil’s fifth-biggest homebuilder by revenue may change hands should international investors, many of whom are unaware of the upcoming election, fail to support the company’s nominees, Calciolari said. Investors who don’t attend the meeting have until May 8 to vote.

International investors are at a disadvantage because some of the challengers’ board nominees will be announced only during the meeting on May 11, Calciolari said.

Polo Gestao de Recursos has nominated five new people to the board, including Claudio Andrade, a partner at the firm, according to regulatory filings. Rio Bravo and Funcef, the pension fund of state-controlled bank Caixa Economica Federal, have also put forth candidates to Gafisa’s board.

Share Performance

The funds have requested a so-called “multiple vote” on the nominees, known as cumulative voting in the U.S.

Gafisa shares fell 3.8 percent to 3.80 reais at 5:03 p.m. in Sao Paulo. They are down 7.8 percent this year, compared with a 7.2 percent gain for the benchmark Bovespa index. Its competitor Cyrela Brazil Realty SA Empreendimentos e Participacoes is up 6.3 percent this year.

Gafisa posted a consolidated net loss of 1.03 billion reais ($537 million) in the last three months of 2011, compared with a loss of 14.1 million reais in the same period a year ago.

Gafisa said its net debt rose 32 percent from a year earlier to 3.24 billion reais in the fourth quarter.

“Our strategy is to not take on additional debt,” Calciolari said. The company will “pay our debt that we have in the short-term. We are not accessing the market.”

Shareholders’ Interests

Gafisa’s current board of directors has neglected the interests of shareholders, failing to solicit their opinion when the company received takeover proposals and belatedly reporting write-offs from events that occurred in previous years, Polo’s Andrade said in a telephone interview from Rio de Janeiro.

“One of the problems we had was a question of transparency,” Andrade said.

The company started implementing its strategy for a turnaround last October by naming a new chief financial officer, hiring separate heads of each business unit and scaling back its geographic focus to Rio de Janeiro and Sao Paulo, Calciolari said.

“We are on the right track,” Calciolari said.

Proxy advisory firms ISS, or Institutional Shareholder Services Proxy Advisory Services, and Glass Lewis & Co. have both endorsed Gafisa’s slate of board nominees.

“Despite the company’s well-publicized difficulties, the dissident shareholders have failed to present a sufficiently detailed or convincing rationale regarding their alternative strategy and board slate,” ISS analysts wrote in an April 30 report. “A vote against the management slate could also have unintended consequences, since there are no guarantees regarding which individuals may be nominated by minority shareholders at the time of the meeting.”

To contact the reporters on this story: Gabrielle Coppola in Sao Paulo at; Telma Marotto in Sao Paulo at

To contact the editor responsible for this story: David Papadopoulos at

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