AltaGas shares soar after it cuts dividend, announces new round of asset sales

Shares in AltaGas Ltd. soared on Thursday morning after it announced it will slash its dividend by 56 per cent and sell its remaining majority stake in a B.C. hydroelectric power operation for $1.39 billion.

On his first conference call days after officially taking over as CEO, Randy Crawford said he wants AltaGas to adopt a self-funding model that emphasizes debt retirement, less reliance on equity markets to raise capital and more control over its assets by “consolidating” minority stakes in projects.

“I believe that AltaGas has a unique value proposition. Our premiere midstream and utility assets are located in some of the fastest-growing markets in North America,” he said on the call.

AltaGas has a network of natural gas processing plants and pipelines in Western Canada and 1.6 million utility customers in five northeastern U.S. states.

“In order to capitalize on the significant growth these two very attractive businesses provide us, we had to make some hard choices,” he added. “As such, we took steps to de-lever the balance sheet that included the resetting of the dividend payout, the completion of $3.8 billion of asset sales and the commitment to sell another $1.5 billion to $2 billion of non-core assets.”

In early trading on the Toronto Stock Exchange, AltaGas shares rose by as much as 16 per cent to $15.93.

Its shares closed at $26.66 on July 25 after the company announced the sudden resignation of former CEO David Harris following an unspecified complaint that it said was unrelated to the company’s operations.

Harris’s departure came just weeks after closing the transformational $9-billion takeover of Washington, D.C.-based energy utility company WGL Holdings, Inc., he had spearheaded for the company.

Since then, in an effort to pay down debt, AltaGas has spun off its Canadian utilities through an initial public offering to raise $910 million and sold natural gas midstream assets and power generating assets to raise $560 million.

Last spring, it sold a 35-per-cent stake in its Northwest Hydro Facilities to a joint venture controlled by Axium Infrastructure Inc. and Manulife Financial Corp. division for $922 million.

The same venture is buying its remaining 55 per cent in the hydro assets, it said.

Crawford said the Calgary-based company hasn’t yet identified which non-core assets it intends to sell in 2019.

Its monthly dividend is to fall to eight cents per share beginning in January, down from 18.25 cents per share.

It unveiled a $4.94-billion 2019 budget on Thursday with most of the spending aimed at retiring debt.

It said $1.3 billion is set aside for capital projects which include completing Canada’s first propane export terminal at Ridley Island on the West Coast in the first quarter in advance of filling its first ships in the second quarter.

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