TransAlta Cuts Dividend to Save Money for Shift Away From Coal

  • Quarterly dividend cut to 4 Canadian cents a share from 18
  • Company plans to raise as much as C$600 million in debt

TransAlta Corp, the Alberta power generator, cut its quarterly dividend by more than a third to save money as it transitions toward gas and renewable power generation and away from coal.

The quarterly dividend was cut to 4 Canadian cents a share from 18 cents previously, the company said in a release Thursday. Calgary-based TransAlta doesn’t expect to raise equity this year as the reduced dividend will “strengthen its balance sheet.” The utility plans to raise debt to fund $400 million of obligations maturing in 2017.

“The actions we are taking today are prudent and proactive steps that will maximize our long-term financial flexibility,” Dawn Farrell, chief executive officer, said in the release. “We are taking action now to ensure we can manage our transition from a position of strength.”

TransAlta, which has more than 70 power plants in Canada, the U.S. and Australia, said it will negotiate with the government of Alberta to “ensure the company has the certainty and capacity” to invest in clean power. The stock fell 1 cent to C$4.36 in Toronto on Thursday and is down 60 percent in the past year.

Alberta, home to Canada’s oil sands and the largest carbon polluter among provinces, will need to replace about 6,000 megawatts of coal generation capacity with cleaner fuel sources such as wind and natural gas to meet the government’s goal of 30 percent renewable energy and a coal phaseout by 2030.

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