CALGARY - Shares of debt-ridden Opti Canada Inc. (TSX:OPC) plunged Wednesday by almost 40 per cent as the market sold off the oilsands developer and investment houses started charting the company's journey to zero.

Opti Canada shares fell to 28.5 cents on the Toronto Stock Exchange by mid-afternoon trading after opening at 40 cents, as investors sold off 28.9 million units on fears of rapidly deteriorating financial position.

The company, which holds 35 per cent of Nexen Inc.'s Long Lake oilsand project, said Tuesday it had hired Lazard Freres & Co LLC to help it examine strategic options for its large debt load.

In a research note entitled "Going to Zero," RBC Dominion Securities analyst Mark Friesen said the appointment of Lazard signals the company may be headed for a debt restructuring.

Also on Wednesday Moody's downgraded Opti's $2.7 billion of debt, issuing a negative outlook reflecting the company's declining liquidity and the credit rating agency view Opti would be unable to meet its cash requirements this year.

"The negative outlook reflects our view that Opti's capital structure is unsustainable and will likely need to be restructured," Moody's said. "A downgrade will occur if Opti files for creditor protection or restructures its debt in a manner economically detrimental to the full claims of its lenders."

The stock has dropped more than 50 per cent since Friday.

Opti has been pressured by persistent operational problems at Long Lake, which has restricted production and limited the company's cash flow, needed to service its debt.