S&P drops OPTI Canada to CCC+

Standard & Poor's said it lowered the long-term corporate credit rating on OPTI Canada Inc. to CCC+ from B-, its $425 million first-lien debt and C$190 million secured revolving credit facility to B from B+ with 1 recovery rating and its $1.75 billion second-lien senior secured debt to B- from B with 2 recovery rating.

The agency also assigned B issue-level and 1 recovery ratings to the company's $100 million in add-on and $300 million in new first-lien senior secured debt issues.

The outlook is stable.

S&P said the downgrade reflects the view that the additional debt has weakened the company's financial risk profile.

Ratings reflect the company's high leverage, forecast negative free cash flows and the opportunity costs associated with production shortfalls if operating efficiency deviates from expectations, the agency said.

Somewhat offsetting these weaknesses are the long-term growth prospects inherent in the Long Lake in-situ project's large resource base and its competitive cost profile, the agency noted.

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