OPTI: CNOOC unit agrees to acquire second-lien notes, common shares

By Caroline Salls

Pittsburgh, July 20 - OPTI Canada Inc. entered into an agreement with CNOOC Ltd. indirect wholly owned subsidiary CNOOC Luxembourg Sarl for the acquisition of the company's second-lien notes and all of the outstanding shares of OPTI through a transaction valued at $2.1 billion, according to a company news release.

Specifically, CNOOC Ltd., through its subsidiaries, will acquire OPTI's $1 billion of 8¼% senior secured notes due 2014 and $750 million of 7 7/8% senior secured notes due 2014 for a net cash payment of $1.18 billion; acquire all of the company's outstanding common shares for $34 million in cash, equal to $0.12 per common share; and assume OPTI's $300 million of 9¾% first-lien notes due 2013 and its $525 million 9% first-lien notes due 2012.

The company said $37.5 million of the total transaction consideration will go to backstop parties.

OPTI said its board of directors has unanimously approved the transaction, which will be implemented through a Companies' Creditors Arrangement Act and Canada Business Corporation Act plan of arrangement.

The company said all of its trade creditors and project operator Nexen Inc. will be paid in the ordinary course of business.

"CNOOC Limited is a technically experienced and well-capitalized company that is equipped to support further development at Long Lake and future expansions in the Canadian oil sands," OPTI president and chief executive officer Chris Slubicki said in the release.

The transaction is subject to approval by a majority in number, representing at least two-thirds of the principal amount, of votes cast by the second-lien noteholders. The company said the noteholders are expected to meet in September.

OPTI said it has received support agreements from holders of roughly 55% of the principal amount of the second-lien notes.

If the transaction is terminated, other than in connection with a superior proposal, the parties to the support agreements would proceed with the company's previously announced restructuring plan under specified circumstances.

In addition, the transaction is subject to government and regulatory approvals by authorities in Canada and the People's Republic of China as well as Alberta court approval.

The transaction, which is expected to close in the fourth quarter, will not be subject to a shareholder vote, the release said.

OPTI Canada is a Calgary, Alta.-based company focused on developing oil sands projects.

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