TransAlta Corp. (TA) plunged the most in five years after the Alberta electricity producer slashed its dividend 38 percent to fund growth projects.
The shares fell 7.2 percent to C$13.76 at the close in Toronto, the biggest decline since February 2009. The stock has dropped 16 percent in the past year.
Transalta reduced its dividend to C$0.72 (65 cents) from C$1.16, the Calgary-based company said today in a statement. It has struggled with low prices for coal-fired electricity generation in Alberta and Washington state, where it operates the Centralia plant.
“To be able to grow, we have to have a solid balance sheet,” Chief Executive Officer Dawn Farrell said in a conference call today. “The market itself didn’t have the confidence that our dividend was sustainable.”
The decision to cut the rate was prudent and gives the company the flexibility to execute growth plans, Ben Pham, a Toronto-based analyst with BMO Capital Markets, said in a note to clients today.
The company reported a fourth-quarter loss of C$66 million compared with net income of C$39 million a year earlier.
Transalta also announced that it agreed to sell its 50 percent stake in CE Generation, Blackrock development and Wailuku to MidAmerican Renewables, its partner in the holdings, for $193.5 million.
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