Moody's rates OPTI Canada notes B1

Moody's Investors Service said it assigned a B1 rating to OPTI Canada Inc.'s pending $750 million seven-year senior second secured note offering and affirmed the company's Ba3 corporate family and B1 senior second secured note ratings.

The outlook is stable.

Note proceeds will be used to fund a roughly $80 million interest reserve account, to retire OPTI's $450 million first secured term loan B and to fund phase I cost overruns.

The agency said the note rating is notched to B1 to reflect contractual subordination to a C$500 million first secured revolving credit facility due 2011.

The Ba3 corporate family rating continues to reflect strong asset coverage, the late stage of phase I development, OPTI's stated commitment to fund any further cost overruns with new equity and its funding of visible phase I costs to completion with committed long term funding, Moody's said.

The ratings also reflect escalated costs; project cost, completion and performance risks; and the specific need to see that OPTI's Ore-crude unit operates to design specifications, the agency added.

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