If shareholders of Kinder Morgan (KMI) were scared by the company's press release Friday, they are likely terrified now.
Late Tuesday, Kinder Morgan announced that it would be slashing its dividend by 75% to $0.12 per share from its current quarterly level of $0.51. Shares of the company plunged 6% in after-hours trading.
"We evaluated numerous options, including significant asset sales, but ultimately concluded that these other options were uneconomic to our investors in the long run," said co-founder Rich Kinder in a company statement. "This decision was not made lightly, but we believe it is in the best interests of the company, its shareholders and employees."
The funds that were originally allocated for the dividend will be used to help ensure that Kinder Morgan maintains its investment-grade weighting, and to maintain and grow its energy markets.
Investors had been concerned about how Kinder Morgan would meet its current obligations, as well as new obligations posed by its increased stake in Natural Gas Pipeline Company of America. The increased stake in the debt-laden NGPL was enough for Moody's to change its outlook on Kinder Morgan debt to Negative from Stable.
"We believe today's action is beneficial to our shareholders," Kinder said. After-hours stock movement suggests that its shareholders are not so sure.