Moody's rates OPTI Canada loan Ba3, note B1

Moody's Investors Service said it downgraded OPTI Canada Inc.'s corporate family rating to Ba3 from Ba2, assigned a Ba3 rating to OPTI's pending C$500 million first-lien senior secured five-year revolving credit facility, a B1 rating to its pending $1 billion second-lien senior secured eight-year note offering and affirmed its Ba3 $450 million senior seven-year term loan B.

The outlook is stable.

The notes and revolver will replace OPTI's first-lien secured C$900 million project debt facility. The second-lien secured term loan B would then convert to first-lien secured status, ranking pari passu with the new revolver. Proceeds will fund an interest reserve account, repayment of C$341 million in project debt facility borrowings, future phase I development costs and a portion of phase II costs and resource delineation and evaluation across all of OPTI's oil sands leases.

The agency said the downgrade of the corporate family rating reflects OPTI's substantially higher consolidated pro forma debt and leverage, a reduced degree of creditor control over project outlays with the pending project debt facility cancellation, the 20% project cost increase and a currently modest delay in project completion and start-up dates.

The ratings are supported by roughly C$1.4 billion of first-in cash common equity; a very large world scale resource base engineered by a major third-party engineering firm; the deep pockets, managerial, operational and technical depth, services sector influence and synthetic crude oil marketing capacity of partner Nexen and surface project technology and design that is deemed to not encompass inordinate or insurmountable risk to completion or ongoing performance of the project, Moody's said.

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