Moody's drops OPTI Canada

Moody's Investors Service said it downgraded OPTI Canada Inc.'s corporate family rating and second secured note rating, but left OPTI's first secured bank revolver rating unchanged.

These ratings were also placed under review for potential further downgrade, the agency said, noting that the corporate family rating is downgraded to B1 from Ba3, the Ba3 senior first secured rating for OPTI's C$500 million bank revolver remains unchanged, and the senior second secured rating on $1.75 billion of notes is downgraded to B2 from B1.

Moody's added that it does not rate OPTI's C$150 million first secured one year revolver.

According to the agency, the downgrade reflects i) the cumulative impact of project start-up delays and cost overruns on cash balances and back-up funding, ii) the likelihood that if Phase I can reach sustainable operations this quarter, as the long Lake partners hope, the 2009 price, price differential, and cost environment appears likely to pull Phase I cash flow below expectations, and iii) OPTI's fund raising effort takes place under very challenging market conditions.

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