It's been a rough month for OPTI Canada Inc. , which has a 35 per cent working interest in the Long Lake project operated by Nexen Energy. Early Wednesday, the firm announced plans to add $400-million (U.S.) of short-term debt to its balance sheet.
That news comes just a few weeks after OPTI posted its second quarterly loss for the year. Investors sure don't like the prospects. The stock's off about 15 per cent this morning, and is down around 35 per cent since the July 15 earnings release.
OPTI's management has stated the company is under a strategic review, and investors assumed that meant trying to sell some assets. If that's the case, OPTI may not be having much luck because a sale would be preferable to adding more short-term debt.
This past November, the firm issued $425-million of 9 per cent, three-year debt. Wednesday's issue, sold via private placement, comprises $100-million of senior notes due 2012 and $300-million more due 2013. In total, OPTI must now repay about $2.5-billion over the next four years.
The new debt is supposed to help OPTI ramp up its Long Lake production, but problems keep arising, such as pipeline capacity and unexpected maintenance. Because the project has yet to flourish, OPTI's stock never recovered from the hit all oil companies took in the fall of 2008.
When the stock market crashed, OPTI plummeted from a high near $25 to under $2. The shares have effectively moved sideways since and now trade around $1.22.
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