RusHydro board divided over share issue
* Five board members offer resignation over share issue vote
* Claim the company failed to follow correct procedures
* News could re-open row between Rosneftegaz and government
By Sonia Elks
MOSCOW, Dec 13 (Reuters) - Five of the 13 board members of Russian state-controlled hydroelectric company RusHydro have offered their resignations in a split over a planned new share issue.
RusHydro is part of the government's privatisation plan and its board is divided over whether it should raise 50 billion roubles ($1.64 billion) in recapitalisation cash for investment through an additional share issue.
The boardroom split comes after Russian media reports that President Vladimir Putin signed off an alternative plan to use 50.2 billion roubles from Russian state energy holding company Rosneftegaz to recapitalise RusHydro.
The resignations threaten to ignite a dispute between the government and Igor Sechin, who holds the dual roles of chairman of Rosneftegaz and CEO of oil firm Rosneft, in a long-running battle over Russia's privatisation programme.
Sechin, a close Putin ally who held the position of deputy prime minister and energy "tsar" in the last government, had pushed to reassert state influence over the power sector after reforms that broke up the Soviet-era power monopoly.
He faces resistance from Prime Minister Dmitry Medvedev's government, which is keen to promote further privatisation and investment so that Russia's power sector can expand its capacity to meet growing demand.
Sechin had previously hoped Rosneftegaz could use dividends from its stakes in Gazprom and Rosneft to buy up energy and power assets. Rosneftegaz was earlier in the year considering buying a blocking stake in RusHydro.
However, his plan met resistance from parliament, with Deputy Prime Minister Arkady Dvorkovich suggesting Rosneftegaz should pay to recapitalise RusHydro. Putin ultimately sided with parliament.
RusHydro, which has a market value of around $7.5 billion, was one of dozens of subsidiaries created from Russia's former electricity monopoly Unified Energy System in 2008 in a sweeping reform of the power sector. The break up was plagued by a lack of transparency.
RusHydro's board initially voted in favour of a share issue on Nov. 16.
However, members of the group offered their resignations on Friday over concerns the decision violated the law as corporate procedures had taken place before a presidential decree, according to Reuters sources..
Those resigning from RusHydro are Vladimir Tatsiy, who is also first vice-president of Gazprombank, Boris Kovalchuk of Inter RAO, Grigory Kurtser of Rosneft; Mikhail Shelkov of Obyedinyonnye Investitsii and Sergey Shishin of VTB Bank, according to a statement by RusHydro.
RusHydro said several of the letters of resignation had cited "disagreement on the sequence of certain procedures" over the new share issue.
RusHydro said it believed the sequence of procedures did not contradict Russian law and that the current seven member acting board "will continue to be able to satisfy quorum requirements stipulated under Russian law".
A spokesman for the company indicated that it plans to go ahead with the additional share issue, saying they expect to go ahead with an initial offer to existing shareholders, who have preferred rights to buy the new issue, by the end of the year. ($1 = 30.5630 Russian roubles) (Reporting by Reuters trainee Sonia Elks; Editing by Megan Davies and David Cowell)
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