Calgary-based Inter Pipeline Ltd. is slashing its dividend, cutting executive pay and suspending the sale of its European Bulk Liquid Storage in response to the significant decrease in global energy prices and the COVID-19 pandemic.

The company said its dividend will be reduced by 72 per cent.

“The cost-of-service and fee-based cash flow from our pipeline and storage franchises are resilient as history has shown over many economic cycles,” said Christian Bayle, Inter Pipeline’s President and Chief Executive Officer, in a news release. “It is important to be clear that the decision of the board of directors to reset the dividend in no way reflects a lack of confidence in our core businesses. However, we are currently in a unique and very challenging business environment driven by the COVID-19 pandemic and oil supply conflict between OPEC+ member nations.

“Against this difficult backdrop, Inter Pipeline has a large and well-advanced capital program focused on the development of the Heartland Petrochemical Complex. Well considered action to improve our financial flexibility was necessary and the Board has determined that retained cash flow is the most effective form of equity financing for our capital program.

“The reduction in the dividend results in annualized cash savings of approximately $525 million, which positions us to self-fund the remaining equity portion of the financing requirements of the Heartland Complex without the need for external equity or DRIP financing.”

Bayle said that despite being at an advanced stage in the sale of the European Bulk Liquid Storage the company has made the decision to suspend sales activities.

“Europe, like the rest of the world, is urgently addressing the COVID-19 pandemic. All European countries we operate in have recently implemented sensible measures to greatly restrict travel and human contact. Potential purchasers of this business have been significantly affected which has had a material impact on the execution of our process,” said Bayle. 

“This is clearly not the right environment to pursue and complete a major pan-European transaction, though we may revisit this process at a later date.”

The company also announced that the President and Chief Executive Officer’s salary will be reduced by 20 per cent; all other executive salaries will be reduced by 10 per cent; and the Board of Directors’ cash retainer will be reduced by 15 per cent.