OPTI to repay revolver borrowings with proceeds from sale of interest in joint venture assets

By Sara Rosenberg

New York, Dec. 17 - OPTI Canada Inc. plans to repay and cancel its C$150 million revolving credit facility and repay some borrowings under its C$500 million revolver using proceeds from the sale of a 15% working interest in all its joint venture assets to Nexen Inc. for C$735 million, according to a news release.

In addition, the C$500 million revolver would be permanently reduced to C$350 million in connection with the transaction.

Closing is expected to occur in late January and is subject to, among other things, approval from a majority of lenders under the C$500 million revolver.

The revolver would also be amended to revise the senior debt to EBITDA and debt to capitalization ratios.

In the absence of completing this transaction or another transaction with significant cash proceeds and the associated amendments to credit facility covenants, the company expects to be unable to meet its first-lien debt to EBITDA ratio starting in the first quarter of 2009.

In addition, assuming continued reduced cash flows, and in the absence of this transaction, the company expects a significant increase in the risk that it will be unable to fund the maturity of its C$150 million revolver and its $71 million high-yield interest payment in June 2009.

OPTI is a Calgary, Alberta-based company focused on developing an integrated oil sands project.

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