BUSINESS
07/13/2011 03:34 EDT | Updated 09/12/2011 05:12 EDT

Opti Canada Files For Creditor Protection, $375 Million In New Investment Funds To Be Released

CP

THE CANADIAN PRESS -- CALGARY - Opti Canada Inc. (TSX:OPC) has filed for a court-supervised restructuring that will transfer ownership of the oilsands developer to creditors who will provide $375 million in new investment funds.

Opti's current shares will be delisted and cancelled. Current shareholders would get no money for the shares they've held but they will get rights to buy up to 20 per cent of new shares in the restructured company.

The warrants issued to current shareholders will expire seven years after the closing date of the restructuring.

Opti's has committed to pay its trade payables to suppliers and employee benefits in the normal course.

The Calgary-based company appeared Wednesday before the Court of Queen's Bench of Alberta to begin implementing its proposed restructuring. The plan will require court and creditor approval before it can be implemented.

Creditors holding more than 50 per cent of the company's debt have agreed to support and vote for the restructuring plan.

One of the plan's conditions is that Opti refinance certain debt due in 2012 and 2013 before the restructuring closes.

Opti will also have the right to accept a superior proposal in certain conditions, the company said.

"The restructuring and new equity commitment we have negotiated is indicative of the support of Opti's noteholders, who recognize the long-term value in the company's asset base," said Chris Slubicki, Opti's president and chief executive.

"The recapitalization of our balance sheet will provide us with cash resources to continue to advance operations at Long Lake, as well as to begin development at Kinosis, with our operating partner, Nexen,"

The company's shares, which last traded at 11.5 cents apiece, were suspended Wednesday on the Toronto Stock Exchange.

Opti has been undergoing a strategic review for well over a year, in the hopes a corporate or asset sale would help it address its debt troubles.

The company has a 35 per cent stake in the Long Lake oilsands project, which is operated by Nexen Inc. (TSX:NXY), one of Canada's largest oil and gas producers.

At Long Lake, the companies pump steam deep underground to soften the peanut butter-thick bitumen so it can flow to the surface. The project is unique in that uses the dregs of each barrel of crude as a fuel source.

The operation has been beset by a number of glitches that have prevented it from reaching is target production rate of 72,000 barrels per day.