Index Crash

Those financing options have slammed shut as the collapse in crude and natural gas markets dried up cash flow and deterred lenders. As a result, so-called midstream companies -- their pipelines bridge the gaps between oilfields and refineries -- have been punished: the Alerian MLP Index of 50 pipeline and other energy infrastructure owners plunged 37 percent this year, on track for its worst annual decline since 2008.   “Kinder Morgan is arguably the bellwether for a midstream sector that has persuaded investors to value the equity solely on dividend yield and dividend growth,” Sighinolfi said. “That was a successful strategy for years." But the companies were too reliant on debt and new equity issues to finance growth, and that’s made them more vulnerable as stock prices have fallen, he said.

Near Default

Kinder Morgan tumbled 12 percent in two days after announcing plans Monday to raise its stake to 50 percent from 20 percent in Natural Gas Pipeline Co. of America LLC. The day after the announcement, Moody’s Senior Vice President Terry Marshall described Natural Gas Pipeline’s capital structure as "untenable," and said Kinder Morgan will have to inject cash to prevent a default.

Kinder Morgan fell 7.9 percent to $20.66 Wednesday in New York, the lowest closing price since the company made its public debut in 2011. The stock has lost 51 percent its value this year, the worst performance of any pipeline operator in the Standard & Poor’s 500 Index.   Kinder, 71, has remained bullish on his namesake company, even as he’s watched the value of his holdings shrink. Kinder is the largest shareholder in the company he co-founded in the 1990s, with 245 million shares at the time he handed the chief executive reins to long-time protege Steve Kean in June. The 50 percent plunge in the stock occurred even as Kinder added half a million shares to his portfolio. Kinder, who remains chairman, didn’t respond to a request for an interview conveyed through spokesman Dave Conover.

Company Consolidation

In 2014, Kinder orchestrated the biggest energy-industry takeover of the year with the $44 billion consolidation of a splintered empire of partnerships under the Kinder Morgan umbrella. The union that vaulted Kinder Morgan to the No. 1 spot among North American pipeline operators was intended to lower borrowing costs and strengthen the company’s ability to swallow smaller rivals.   Kinder and Kean are unlikely to allow financial metrics to deteriorate to the point where Moody’s or any other credit- rating firms would feel compelled to hit them with a downgrade, Phil Adams, senior investment grade analyst at Gimme Credit, said in a note to clients on Wednesday.   Historically, the company “has been steadfast in protecting investment grade ratings to ensure adequate access to growth capital,” Adams said.

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