S&P rates Festival Fun notes B

Standard & Poor's said it assigned a B corporate credit rating to Festival Fun Parks LLC and a B rating to the company's $150 million senior unsecured notes due 2014. The outlook is stable.

Proceeds and $54 million in cash equity will be used to refinance existing debt and to fund the acquisition of former parent company Palace Entertainment Inc. by MidOcean Partners LLP, a private equity firm, for $192 million, representing a 6.4x EBITDA multiple. Pro forma total debt was $152 million at Dec. 31.

S&P said the rating reflects the company's high debt leverage, reliance on favorable weather during the short, summer water park operating season and potentially volatile profitability, offset by minimal business diversity through geographic dispersion. Festival owns and operates eight water parks and 23 family entertainment centers located in eight states and has a short operating history, having grown through a series of five strategic acquisitions since 1998.

Debt to EBITDA, adjusted for operating leases, was at 6.5x for 2005.

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