Well, it happened. Kinder Morgan (KMI) bowed to the inevitable and slashed its dividend by 75% after hours on Tuesday.

Interestingly, KMI stock popped on Wednesday, as investors seemed genuinely relieved that the uncertainty surrounding the stock is finally over.

Normally, I would run away screaming from a stock that had just slashed its dividend by 75% because that is a sure sign of financial distress. But what we have in Kinder Morgan is less a matter of a company in peril and more a case of a company restructuring how it is financed.

Kinder Morgan is not an MLP, but it essentially operates and finances itself like one. And in the standard MLP formula, the vast majority of free cash flow gets paid out as dividends (“distributions” in MLP parlance). Growth projects are funded by issuing new shares or new debt. This is because of the quirks in the tax code that force MLPs to distribute the vast majority of their earnings to shareholders, but a side effect is that it effectively gives Mr. Market a “vote” on each major new growth initiative.

It was a fine system that served the midstream MLP space well for the better part of two decades… right until it didn’t. With market sentiment towards all things related to energy souring – and with Kinder Morgan already highly leveraged – Mr. Market voted a resounding “No.”

I should be clear on something here. I’m not a believer in market efficiency, nor do I believe that the all-knowing, god-like market “predicted” a dividend cut at KMI. I believe it is far more accurate to say that markets create self-fulfilling prophecies. Becausethe market had already pushed the stock down, it all but forced Kinder Morgan to cut its dividend.

In the case of Kinder Morgan, we do not have a company in distress. We have a healthy company with an impressive cross-continental network of essential pipelines that is now in the process of reorganizing the way it is financed. The market has decided that it no longer likes the traditional MLP funding model, so Kinder Morgan is transitioning into more of a typical corporate model in which new growth projects are financed with retained earnings.